Equity funds post negative returns in first quarter
Equity funds post negative returns in first quarter
Dubai: The majority of equity funds registered for sale in the Gulf reported negative returns in the first quarter of 2008, according to Lipper, an international fund-tracking firm.
The dismal performance follows a whopping 26.5 per cent return last year and topping the international fund classifications, Lipper said in a report.
Equity funds were by far the biggest losers in the first quarter, posting a minus 11.28 per cent return. As an illustration of the extent of the damage, only 38 of the 838 equity funds registered for sale in the GCC (less than five per cent) delivered positive returns.
Funds investing in Kuwait were ahead of other Gulf countries, increasing 11.41 per cent during the first quarter. Bank Al Bilad Kuwaiti Shares topped the category with a quarterly return of 21.10 per cent. Domiciled in Saudi Arabia and managed by Bank Al Bilad, this Sharia-compliant fund uses selection criteria in accordance with its benchmark - the Global Islamic Index.
The second best performing fund was Global Al Durra Islamic, which gained 20.54 per cent over the three months, with volatility at the average level of 18.50 per cent. At the end of March 2008 the fund was exposed over 77 per cent to the financial sector.
"Funds investing in the GCC were the relatively better performing, registering a minus 2.66 per cent return during first quarter. This low performance contrasted with the annual 48.23 per cent gained in 2007, but it is too early to draw conclusions as market participants adopt a 'wait and see' approach before the first quarter results announcement," the report said.
After delivering big returns in 2007, funds investing in India and China suffered, slumping 28.20 per cent and 24.89 per cent, respectively.
The Chinese stock markets witnessed significant losses because of mounting inflation, turmoil in the US market and, more specifically, the selling pressure induced by the flow of non-tradable shares that the securities regulator limited at the end of April.
