Unit trust sales have plunged to their lowest level for three years and are expected to fall further in future as a direct result of the Asian economic crisis. The Investment Funds Association said yesterday total sales during November sank to US$255 million, with the Japanese sector posting the highest level of redemptions at $21 million. Sales of Hong Kong funds were a meagre $31 million, with net gains effectively wiped out by $29 million in redemptions. Industry experts believed sales volumes would deteriorate further for the usually quiet month of December, with uncertain market conditions also a factor. The crisis is also expected to put pressure on smaller fund management groups with less than $100 million under management which lacked the support of a parent company. IFA chairman Peter Lord said: 'As uncertainties over the outcome of the Asian currency turmoil lingered on and the prospect of continued interest rate hikes loomed large in the region, the general investment sentiment in Asia remained weak. 'Although the lingering uncertainties resulted in sluggish sales and continuous net outflows in certain sectors in November, redemptions were not massive nor took place at a scale that exacerbated the financial crisis.' Redemptions exceeded sales in eight of the 14 sectors on offer, with the Asian region and emerging markets - excluding Latin America - the hardest hit. Cash funds, a half-way house between fixed interest and equity, recorded net sales of 11 million. Bond fund sales topped inflows, with about $40 million being invested. Investment advisers yesterday said investors were still concerned about regional markets and were seeking security in fixed interest or guaranteed products. Tressider Tuohy & Partners senior partner Patrick Tuohy said: 'If you cannot really hold yourself back [from equities], then phase in over the next six months.' Mr Tuohy said interest in Asian markets was limited to Hong Kong, the mainland and Taiwan. 'Investors are still buying the story but at a severely slower pace,' he said. North America continued to post net sales during November, reaching $4 million, while Europe posted net sales of about $400,000.
