03-06-2003: Unit trust firms may switch to equities in long term
By Jimmy Yeow, 6.03pm

Unit trust management firms may switch from bond-based funds to equity-based funds in the long term if the KLSE's performance continues to improve, according to the Federation of Malaysian Unit Trust Companies.

"The bond funds were doing fairly well during the past five months but the equities funds was flat due to the performance of the KLSE, compounded by the people's expectations of interest rates going down," said its president Datuk Abdul Azim Mohd Zabidi.

Speaking to reporters after the FMUTM AGM on June 3, he said as equities continued to show a flat performance, there seemed to be an interest in bond funds.

"However, in the long term, there would be a move to equities again," he added.

Abdul Azim said the net asset value of some equities funds was expected to increase if the KLSE Composite Index continues to perform as well as in the past week.

"That is a big 'if'," he said.

Reviewing the unit trust companies' performance last year, Abdul Azim said the total net asset value (NAV) of unit trust funds rose to RM53.7 billion as at end-2002 from RM47.35 billion in 2001.

The NAV of the industry accounted for 11.15 per cent of the KLSE market capitalisation, which was 0.97 per cent higher than that in 2001.

The Malaysian unit trust industry registered a compounded annual growth rate of 13 per cent for the past 10 years.

"The unit trust industry had another tough year as all the funds on average posted 3.5 per cent gains and 32 out of the 162 unit trusts ended in negative territory," he said.

The 14 unit trust management companies launched 26 funds last year, bringing the total number of unit trust funds to 172.