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<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0><TBODY><TR>Market woes hit unit trusts
</TR><!-- headline one : end --><TR>Amount invested in second quarter plummets by $1 billion from first quarter </TR><!-- Author --><TR><TD class="padlrt8 georgia11 darkgrey bold" colSpan=2>By Lorna Tan, Finance Correspondent
</TD></TR><!-- show image if available --></TBODY></TABLE>
<!-- START OF : div id="storytext"--><!-- more than 4 paragraphs -->POOR market sentiment has taken a huge toll on unit trusts with a $1 billion fall in the amount invested in the second quarter, compared with the first three months of the year.
Only a net $287.9 million was put into the sector in the three months ended June 30, in sharp contrast to the $1.29 billion in investments in the first quarter.
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</TD></TR></TBODY></TABLE>The chief executive of wealth management firm dollarDex, Mr Chris Firth, attributes the fall-off to the 'very negative' sentiment of customers, who prefer to adopt a wait-and-see approach.
Ms Mah Ching Cheng, research manager at unit trust distributor Fundsupermart, was not surprised at the sharp decline as investors are fearful of buying into funds, particularly equity ones, after seeing so much carnage this year.
'Negative news on further bank write-downs, high oil prices, and worries over inflation are just some of the many concerns that investors have over the second quarter,' she said.
Another reason for the sharp fall is the lower inflows for approved products under the CPF Investment Scheme, following rule changes that kicked in on April 1.
There were some signs of hope. The net flows into equity offerings in the second quarter hit $212.7 million - a big turnaround from the first quarter when there was a net decrease of $85.7 million.
This was because of attractive valuations in various markets after a series of market fallouts, said Mr Suthee Luangaramkul, research analyst at fund tracker Lipper Inc.
Ms Mah believed that investors are starting to see that equities are looking attractive after the big falls that have occurred.
The MSCI Emerging Market Index fell 22.5 per cent in the second quarter while the MSCI World Index fell 16.9 per cent.
'We do see higher fund volumes for both Asian equity funds - such as India and China funds - on the Fundsupermart.com website for the second quarter,' she said.
Oil prices have been showing signs of weakening, with prices hovering at US$115 a barrel, and investors are on the lookout for other signals that may point to an early phase of market recovery.
This would be when volatility starts to ease and that will likely happen when improvements in the US housing indicators, such as reduced foreclosure rates and lower home inventory levels, are seen.
'When banks start to report earnings that are similar or higher than what market analysts estimate, you might even expect a small rally,' added Ms Mah.
Meanwhile, cashed-up investors are advised by Ms Mah and Mr Firth to get into the markets through dollar-cost averaging.
This involves investing the same dollar amount at regular intervals, say monthly, into a diversified investment portfolio. This way, prices paid for the shares or unit trusts are averaged out. [email protected]
</TR><!-- headline one : end --><TR>Amount invested in second quarter plummets by $1 billion from first quarter </TR><!-- Author --><TR><TD class="padlrt8 georgia11 darkgrey bold" colSpan=2>By Lorna Tan, Finance Correspondent
</TD></TR><!-- show image if available --></TBODY></TABLE>
<!-- START OF : div id="storytext"--><!-- more than 4 paragraphs -->POOR market sentiment has taken a huge toll on unit trusts with a $1 billion fall in the amount invested in the second quarter, compared with the first three months of the year.
Only a net $287.9 million was put into the sector in the three months ended June 30, in sharp contrast to the $1.29 billion in investments in the first quarter.
<TABLE width=200 align=left valign="top"><TBODY><TR><TD class=padr8><!-- Vodcast --><!-- Background Story -->RELATED LINKS
<!-- Audio --><!-- Video --><!-- PDF -->
<!-- Photo Gallery -->
</TD></TR></TBODY></TABLE>The chief executive of wealth management firm dollarDex, Mr Chris Firth, attributes the fall-off to the 'very negative' sentiment of customers, who prefer to adopt a wait-and-see approach.
Ms Mah Ching Cheng, research manager at unit trust distributor Fundsupermart, was not surprised at the sharp decline as investors are fearful of buying into funds, particularly equity ones, after seeing so much carnage this year.
'Negative news on further bank write-downs, high oil prices, and worries over inflation are just some of the many concerns that investors have over the second quarter,' she said.
Another reason for the sharp fall is the lower inflows for approved products under the CPF Investment Scheme, following rule changes that kicked in on April 1.
There were some signs of hope. The net flows into equity offerings in the second quarter hit $212.7 million - a big turnaround from the first quarter when there was a net decrease of $85.7 million.
This was because of attractive valuations in various markets after a series of market fallouts, said Mr Suthee Luangaramkul, research analyst at fund tracker Lipper Inc.
Ms Mah believed that investors are starting to see that equities are looking attractive after the big falls that have occurred.
The MSCI Emerging Market Index fell 22.5 per cent in the second quarter while the MSCI World Index fell 16.9 per cent.
'We do see higher fund volumes for both Asian equity funds - such as India and China funds - on the Fundsupermart.com website for the second quarter,' she said.
Oil prices have been showing signs of weakening, with prices hovering at US$115 a barrel, and investors are on the lookout for other signals that may point to an early phase of market recovery.
This would be when volatility starts to ease and that will likely happen when improvements in the US housing indicators, such as reduced foreclosure rates and lower home inventory levels, are seen.
'When banks start to report earnings that are similar or higher than what market analysts estimate, you might even expect a small rally,' added Ms Mah.
Meanwhile, cashed-up investors are advised by Ms Mah and Mr Firth to get into the markets through dollar-cost averaging.
This involves investing the same dollar amount at regular intervals, say monthly, into a diversified investment portfolio. This way, prices paid for the shares or unit trusts are averaged out. [email protected]
