FOR fund managers, there is the sobering thought that the years of work they have put into developing the local unit trust industry has come up against the irresistible force of market reality.
Fund management houses face falling income from any Asian funds they operate as management fees are linked to the size of the fund assets.
Asian stock markets, excluding Japan, basically fell off a cliff last October. No one saw the Asian meltdown coming, as a glance at some of the comments made before the last Fund Manager of the Year awards reveals.
Morgan Stanley Asset Management took seven awards last year in the three and five-year categories.
In its global outlook report issued late in 1996, Morgan Stanley predicted sharply stronger world economic growth for last year: 'The industrial world is expected to expand by 2.8 per cent, augmented by a 6 per cent increase in the developing world (4 per cent in Latin America and 7 per cent in non-Japan Asia). If we are right, next year will mark the strongest increase in the global economy since 1988.' Jardine Fleming (JF) took the coveted Fund Manager of the Year award in the five-year, larger groups category last year. In its outlook for Asian markets for 1997, JF Unit Trusts said the Indonesian market 'is trading at a discount to the region, at 13 times 1996 earnings, and therefore represents good value. With a parliamentary election scheduled for May, politics may cause some jitters but any resulting weakness in share prices should be seen as a buying opportunity.' Fidelity Investments was Fund Manager of the Year in five categories last year. In its outlook for main world markets published in late 1996, Fidelity commented optimistically: 'We believe attractive opportunities can be found in Indonesia where the economic outlook is improving and the interest rate environment is favourable for the stock market.' Then there were those whose outlook should have paid dividends.
Frances Campion, London-based manager of the Morgan Stanley Global Equity Fund, which took top place in last year's three and five-year global equities categories, said she found Asia 'unattractive on a value basis, as its stocks are fully-valued'.
