Unit trust sector expected to do better this year

By Rupinder

2009/03/12

THE unit trust industry is set to do better this year as the stock market stabilises, after a 20 per cent fall in value last year, its first drop in eight years.

"In my opinion, I don't see much downside (in the stock market)," said Tunku Ya'acob Tunku Abdullah, president of The Federation of the Malaysian Unit Trust Managers (FMUTM).Tunku Ya'acob, who spoke to reporters at a briefing in Kuala Lumpur yesterday, believes the Kuala Lumpur Composite Index (KLCI) will stay at its current level.

The market was around this level about four years before it spiked two years ago.The benchmark KLCI index closed at 850.37 points yesterday. It fell some 40 per cent in 2008 on fears about the global economic health.The total net asset value (NAV) of the unit trust industry was down by RM34 billion, or 20 per cent, at the end of 2008. Its NAV was RM169 billion in 2007.The industry has been enjoying double-digit growth since 2001.Although take-up rates of new funds have been slow recently, Tunku Ya'acob said investors are also not rushing to take out their money as the redemption rate is still at acceptable levels of about 2 per cent.

"The industry is still continuing to record net sales of nearly RM18 billion in the first 10 months of 2008," he said in his speech at the Morningstar 2008 Fund Awards.He said the growth of syariah funds has been phenomenal in both value and numbers.By December 2008, the NAV of syariah-based funds had mushroomed to RM17 billion from RM6.8 billion in 2004.The total number of syariah funds launched in Malaysia has also doubled to 147 last year from 65 in 2004.

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