Key Points:
- FSMI lost 5.5% month-to-date
- Top 5 funds were mostly global funds
- Bottom 5 funds were mostly Malaysia funds
During the month of September, the MSCI AC World Index shed 2.9% (in RM terms) as the markets remained focused on the Eurozone debt crisis and on fresh fears of a global downturn and possible recession. In US, the Fed announced that it would embark on “Operation Twist” in a bid to lower longer-term interest rates which have more bearing on mortgage rates and longer-term funding costs for corporations. Elsewhere in Europe, the payout of EUR8 billion to Greece under the initial bailout plan is still pending approval from Eurozone finance ministers, while the European Commission expects Eurozone GDP growth at 0.2% and 0.1% in 3Q and 4Q 2011 respectively after recording a 0.2% growth in 2Q 2011 (growth numbers in q-o-q terms).
Only Japan and Tech (US and Asia Pacific) were in the black for the month of September, as the Nikkei 225, Nasdaq 100 and Bloomberg Asia Pacific Technology indices gained 3.5%, 2.6% and 4.3% respectively (all in RM terms). These gains were mainly attributed to the weakening of the RM against most major currencies. During the month, the FSMI - All Equity index lost 5.5%, bringing its year-to-date returns to -11.6%.
Weakening Ringgit Boosted The Performance of Global Funds
The top performing fund in September, the RHB - GS US Equity Fund, was among the worst performing funds in August. That being said, the fund outperformed its benchmark the S&P 500, which lost 0.3% in September (in RM terms). This outperformance is attributed to its larger holdings in the Tech sector and lesser holdings in underperforming sectors such as energy and materials vis-à-vis its benchmark (based on end August data).
Top performing global funds also managed to outperform their respective benchmarks, with each fund using different strategies. AmOasis Global Islamic Equity and Prudential Global Leaders Fund focused on high-quality large cap stocks in traditionally defensive sectors such as consumer staples and healthcare, while the RHB Global Fortune Fund systematically shorted the markets.
On the currency exchange front, the RM strengthened against the Aussie dollar (for the second consecutive month) by 2.1%, while at the same time weakening against the US dollar, renminbi and yen by 7.1%, 6.9% and 6.7% respectively. Since the start of 2011, the RM had weakened against the yen, renminbi, euro and US dollar by 9.4%, 7.4%, 5.0% and 4.2% respectively (as of 30 September 2011).(Source:iFast Compilation, as at 30 September 2011)
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