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Monday, February 2, 2009

AmInvestment bullish on equity fund returns

AMINVESTMENT Bank Group's fund management division expects its equity funds to see positive returns this year with active trading.

"While we don't expect a bullish market, we intend to value add by opting for liquid stocks and trading in the narrow band of volatility," said fund management chief executive officer Datin Maznah Mahbob.

The fund management division, which aims to double its profit by 2011, manages 43 AmMutual unit trust funds and two exchange-traded funds. It has an equal number of equity and fixed income funds, although fixed income funds represent some 65 per cent of its overall assets under management of RM16 billion.

The fund manager has its work cut out for it, especially since sharp falls in the equities market cut the total value of unit trust funds by RM21 billion in the first nine months of last year.

As for global markets, its fund management chief investment officer for equities Andrew Wong said countries to monitor are those with sufficient "firepower" to overcome the current financial crisis.

"These include northern Asian countries such as China, Hong Kong and Singapore to some extent, although you need to look at the trading band," he said, adding that the trading band can be profitable with accurate timing and execution of stategy.

As for the bond market, its chief investment officer of fixed income Yvonne Phe said bond prices will rally with aggressive interest rate cuts and lack of inflationary fears.

"With the economy slowing and earnings downgraded, investors will avoid the lower quality bonds. This creates a disparity in the market as investors chase after the ultra safe (bonds)," she said.

Emphasis for the local bond market will be on government securities this year due to the need for liquid assets.

"There may be interest in triple A rated bonds, but the yield will be minimum in this environment. So the only way to enhance your return is through trade, which will generate capital gains," she said.

Phe also said that the fund house was monitoring high-yield debt for its global portfolio.

US junk bonds have rallied since December with a 7.47 per cent total return for that month, news agency Reuters reported. US junk, or high-yield bond, sales for this month hit US$3.4 billion (RM12.3 billion) as investors seek opportunity amid low interest rates on US treasuries and re-couping from heavy equity losses last year.

By Jeeva Arulampalam Published: 2009/02/02

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