Iconic Global Mutual Fund Tracker, Morningstar, on ASEAN Fund Industry & Equity Prospect

 

Surprising as it seems, as Morningstar pointed out, Asia has about 60% of the world’s population, but only 12% of the total assets under management in mutual funds. And that is a major structure weakness, that some of ASEAN stock market have been trying to overcome. In Thailand for example, the market noted a lack of young generation Thais participant in the Stock market, and that lead to a multi-year campaign to position the Thai stock market to be more attractive to young Thais.

The following is from Bernama (Source) and the Star (Source):

The cross-border offering of funds to retail investors in Singapore, Malaysia and Thailand is expected to be implemented in the third quarter of the year. When implemented, investors in the region would benefit from having access to a wide and innovative range of funds, says Morningstar Investment Management Asia Ltd.

The Monetary Authority of Singapore, the Securities Commission of Malaysia and the Securities and Exchange Commission of Thailand signed an agreement last year to facilitate the implementation of the project.

“This will offer fund managers a direct and efficient route to distribute their funds in other economies,” Senior Consultant Sheela Veerappan told reporters after the presentation of the Morningstar Malaysia Fund Awards 2014 on Monday. Singapore-based Morningstar Investment Management Asia Ltd, an investment research firm, offers extensive line of products and services to individuals, financial advisors and institutions.

Sheela said similar cross-border offerings of funds were already being practised in the United States.

Meanwhile, on the outlook for the equity market, she said the shift in the flow of fixed income to the equity market would be in a more muted pace this year compared with last year. “Due to the economic conditions, the market this year is poised to probably have a more muted recovery given what’s happening in Russia and Ukraine,” she said, adding that geopolitical factors would also affect market performance.

“Investors are not going to abandon fixed income entirely because it will give them the income stream that will help service their portfolio liabilities,” she added.

Meanwhile, Morningstar’s research analyst Arne Hike said that investors today were becoming increasingly “discerning” on which funds to pick to outperform the average portfolio. “We noticed that in 2011-2013, investors were selling those funds that had done poorly on a peer-relative risk adjusted basis and putting their money into funds that were doing well on the same basis instead,” Hike said in his presentation.

Within the Asian region, Hike said there were plenty of opportunities for mutual fund growth, given the population dynamics favouring the region today.

“Asia has about 60% of the world’s population, but only 12% of the total assets under management in mutual funds.

“Household financial assets are about the same in absolute terms across the different markets so on a per capital basis is going to be lower in Asia,” he said. “But this also really highlights opportunities that would crop up over the next few years in Asia for the gathering of mutual fund assets,” he added.

Equities remained a favoured asset class this year, despite increasing worries about high valuations.

“We’re still seeing good interest in Asian equities, but a lot of investors are also exploring diversification (of portfolios). They are biased domestically and equities in the region have performed very well, but now we find that investors are exploring other areas,” said Sheela.

Earlier, CIMB-Principal Equity Growth and Income emerged the winner of the Asia Pacific Equity Fund while Hwang AIIMAN Growth Fund topped the Islamic Malaysia Equity Fund.

The awards recognise retail funds and fund groups that added the most value for investors within the context of their relevant peer group in 2013 and over the longer-term.

Morningstar provides data on approximately 433,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on nearly 10 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets.

Morningstar also offers investment management services through its registered investment advisor subsidiaries and has approximately $166 billion in assets under advisement and management as of June 30, 2013. The company has operations in 27 countries.[10] Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia.

The company offers an extensive line of products and services for individuals, financial advisors, and institutions. Morningstar provides data on approximately 433,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on nearly 10 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets.

Morningstar also offers investment management services through its registered investment advisor subsidiaries and has approximately $166 billion in assets under advisement and management as of June 30, 2013. The company has operations in 27 countries.

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