Japan funds outperform in second quarter
Japanese equities funds outperformed all other asset classes in the second quarter after a long period of disappointing returns from the asset class, according to data published today.
In the latest quarterly Caps survey from BNY Mellon Asset Servicing, all pooled equity fund sectors provided average negative returns, except for Japanese equity funds, which returned 2.1% and emerging market equity funds, which returned 0.2%.
The results come after a difficult period for Japanese equities, which has resulted in money flowing out of the sector and funds closing down, and a drop in emerging market equity returns earlier this year after they beat other asset class returns in 2007.
Some fund managers have pointed to Japanese inflation as pushing up share prices after years of deflation in the country, and said that the recent rise is a correction after years of falling markets have led to chronic undervaluation of Japanese companies. However, other fund managers are still expressing caution over the medium-term prospects for the market.
UK equity fund returns ranged from -1.1% for standard funds to -2.4% for smaller companies vehicles, though the two sectors beat their relevant market indices.
Global equity funds returned -0.7%, ahead of the FTSE All World Index which returned -1.8% over the same period, according to the report. European excluding UK equity funds returned -4.2%, while pan-European equity funds returned -4.4%. Pan-European funds underperformed the relevant index by 0.5 percentage points.
Fixed income funds also struggled. Both UK and overseas bond managers returned -2.7% and -4.2%. The strongest non-equity returns came from index-linked gilts, which returned 0.9%, and cash funds, which returned 1.3%.
Meanwhile, property pooled fund managers returned -1.7%, meaning the asset class has now had four consecutive quarters of negative returns.
Alan Wilcock, performance and risk analytics manager at BNY Mellon Asset Servicing, said: “The continued decline in property values means that property now falls behind equity results over three and five year periods, but remains the best asset class over 10 years.
"Continued market volatility has also resulted in allocations to cash increasing again to 8.5% within balanced funds, which is the highest level we have seen for over 15 years.”
Balanced pooled funds reported negative median returns for the second consecutive quarter, according to the survey. The funds returned -1.6%, and combined with negative performance in the first quarter, over one year the median return was -8.2%. However, over three and five years balanced funds still returned 7.2% and 10% per year respectively, which means that in real terms--measured against the UK's Retail Prices Index--funds reported returns of 3.1% and 5.9% a year.
-- Write to Phil Craig at pcraig@efinancialnews.com
del.icio.us
Digg
Newsvine
reddit
StumbleUpon
