Unit trusts are doing great so far this year (1 July 2009)

Our half year report on the performance of funds in Singapore will be out by next Monday. But just based on where the FEFI index stands, funds in Singapore have done great this year. The FEFI index which is an index Fundsupermart created to measure the performance of Singapore equity funds, stands at 1,248.84 based on prices as at 26 June. It would probably end up highly by end of June, but just based on this, it means that equity funds here are up on average 24.9%.

If you were holding Asia ex Japan equity funds, or some of the higher risk single country funds like China, India, or the financial sector or commodities sector funds, you would almost certainly be outperforming this. Most importantly though, were you “in the market” or “out of the market” this last six months, that would have a big impact on how your holdings would have performed.

At the start of the year, things were originally looking up, markets had been trending up since the October 2008 lows, and it seemed the worst was over. But investors soon realized that the coming 1st and 2nd quarter of 2009 would actually see the worst economic numbers yet from all the major economies. Since markets as a rule only look forward on average 3 months, they tanked. Global and Asia markets all retreated. Many, like the Singapore market, retreated back to their October lows.

The temptation then must have been strong to throw in the towel and sell out. But in hindsight, it would have been the worst thing to do. Because after that, markets then recovered very strongly, and Asian markets in particular saw gains of 50% or more from March 9th to the half year mark where we stand now. (To find out how your own portfolio actually fared, click on this button called “Analyze my portfolio” on the top right hand side of your view holdings page, this will show you how your holdings fared over different time periods. Like when I do that to my portfolio, it says over 6 months, my portfolio was up 37.9%).

I wrote in my GM column in the Fundsupermart magazine at the start of the year that I felt that this year would surprise many investors by being a positive one (I think many of you have a copy, so you can go and check back for verification). So far, it has proven to be a very positive year with many funds up 30% or more. You didn’t have to have bought in at the March lows. Even if you have bought at the start of the year, if you had held it through the March lows until now, you would be well in the black.

Where do we go from here? Well, I remain optimistic about the prospects of Asian markets so I have stayed invested all this time, and had added to my investments during this last six months in fact. While I don’t anticipate the kind of sharp rebound that we have seen in the last three to four months, I do still see a general uptrend in markets as more and more positive economic data flows in.

So, anyway, in conclusion, many funds are turning in strong performances this year, and let’s drink to more of the same for the second half of the year as well!