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SCMP Reporter

ASIAN and Pacific warrants funds continued to be the top performing sector last month on a year-on-year basis despite their decline in the past two months, according to the Hong Kong Investment Funds Association.

  These warrants funds topped the list for the third consecutive month.

  ''Due to the gearing nature of warrants funds, they tend to rise more than the underlying stock, thus achieving a higher return,'' said an association official.

   With an annual return of 158.51 per cent, the Asian-Pacific warrants sector was followed by Japanese warrants funds and Malaysian equity funds, which registered returns of 94.82 per cent and 94.1 per cent respectively.

  However, corrections in the regional stock markets resulted in most of the Asian fund sectors posting negative gains, with regional funds having a milder drop than single country funds.

  In the first two months of this year, regional funds shed six to 10 per cent while single country funds fell 10 to 15 per cent.

  Consolidation within the Asian stock markets occurred when investors started to take profits after a year of tremendous growth of 80 to 100 per cent in most of the markets.

  ''This has been reinforced by the increase in the US interest rates in February and the anticipation of further interest rate rises,'' said association chairman Richard Haw.

   He said volatility was inherent in any type of investment and investors should take a medium to long-term view in fund investment.

  ''To allow the fund managers to fully capitalise on the opportunities in the economic cycle, investors should be looking at an investment time-frame of three to five years,'' he said.

  In the top performing sector table, four of the top five funds were taken up by Asian-Pacific warrants funds which posted annual gains of between 178.25 per cent and 278.74 per cent.

      The association consists of 41 fund management companies as full or overseas members. In addition, it has 19 associate members, including trustees and other professionals, which are involved in the creation and administration of funds.



Asian-Pacific warrants still top performers