Funds remain robust
The sale of funds in Hong Kong continued to rise last year, despite volatile equity markets and a depressed investment climate.
According to the Hong Kong Investment Funds Association (HKIFA), the industry registered gross and net sales of US$37.47 billion and US$6.20 billion, respectively, for last year. HKIFA says gross sales were up 30.2 per cent over 2010, while net sales dropped 0.7 per cent.
Against a backdrop of low interest rates and high inflation, fund sales were robust in the first half of the year, HKIFA says. Most of the inflows of last year were registered in that period.
However, following the heavy sell-off of global equity markets due to the escalation of the euro-zone sovereign debt crisis and concerns about the outlook of the United States economy in the third quarter, fund sales dropped substantially after August. The fund industry witnessed net outflows in September and October of US$469 million and US$290 million, respectively. The industry returned to net inflows, albeit modestly, towards the end of the year, HKIFA says. Bond fund sales were best supported with 44.4 per cent of overall sales, while equity funds were marginally behind with 43.5 per cent.
In reviewing fund sales last year, Kerry Ching, chairman of HKIFA, points out that fund sales had a strong start when Hong Kong investors were keen to put their money to work in a high inflation and low interest-rate environment.
'However, spooked by concerns about the global economic outlook and the contagion effect of the euro-zone sovereign debt crisis, investors' risk aversion increased and sales lost momentum in the second half of the year.
'Nevertheless, net outflows in September and October were attributable more to a drop in gross sales rather than a surge in redemptions,' Ching says.
As for the outlook for funds this year, Bonnie Lam, vice-chairman of the unit trust subcommittee at HKIFA, says market sentiment has improved in the past two months as the euro-zone debt crisis seems to have stabilised and US economic data announced recently was better than the market expected. Also a number of central banks have adopted more accommodative monetary policies.
HKIFA has 67 fund management companies as full overseas and affiliate members. It has 51 associate members, including lawyers, accountants, trustees and other professionals involved in the creation and administration of funds.