Fed’s actions negatively impact Asian funds

Asia is feeling the ill-effects of Federal Reserve actions. Asia is feeling the ill-effects of Federal Reserve actions.

Concerns over the looming tapering of asset purchases by the Federal Reserve have negatively impacted market sentiment in Asia, as observed in the shrinkage of assets under management during the past month.

Word of this comes from Cerulli Associates, which examines trends among Asian mutual funds, money market funds and new products in its August 2013 issue of the “Cerulli Edge: Asian Monthly Product Trends Edition.” The publication also features analyses of asset management flows by country, including China, Korea, Taiwan, Singapore, Malaysia and Thailand.

In June, long-term Asian mutual funds under management dipped to $2.108 trillion from $2.156 trillion, a 2.2 percent decline. Assets under management of exchange-traded funds (ETFs) managed to rise in value over the same period by 0.8 percent, increasing to $140.1 billion from $138.9 billion.

However, the increase is less than the 2.5 percent rise recorded in May and the 4.9 percent gain posted in March, a six-month high.

“North Asian markets took a bigger hit than their Southeast Asian counterparts, with Taiwan seeing the largest drop of 9.4 percent over the month, erasing gains seen in the first half of the year,” the report states. “Compounding the uncertainty is China’s slowing growth and rumors of a liquidity crisis.

“Funds focused on Greater China have fallen out of favor among Asian investors with June experiencing among the worst month-on-month declines so far this year at 7.6 percent.”

Asian long-term foreign-invested mutual fund AUM also suffered a sharp decline in June, dipping by 5.9 percent to $488.6 billion from $519.2 billion in May. At its six-month peak in February, long-term foreign-invested mutual funds totaled $518.1 billion.

Long-term mutual fund assets under management by asset class in June were as follows:

Asset class

AUM

Equities

$862.1 billion

Bonds

$512.1 billion

Mixed assets

$491.1 billion

Property

$61.3 billion

Others

$107.7 billion

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