Sales flows for Asian funds totalled USD95bn in 2009, the smallest volume since 2004 and just 19 per cent of the sales in Asia’s peak year of 2007, a report by Lipper shows.
India recorded the strongest sales of the year, though sales slowed in the last quarter. Support for equity had been inconsistent all year, but industry insiders believe the banning of sales commission spurred Q4 outflows in the equity category where front-end loads are highest.
Thailand was the year’s surprise; the industry recorded its second best year (USD18bn) and was USD1bn short of its 2007 best. After a visible slowdown in Q3, flows picked up in Q4. Importantly, equity funds returned to positive territory.
China is tackling short-term trading head on with the introduction of a back-end load from March 2010. The back-end load will be mandatory for investors who hold their funds for less than three years, but will reduce progressively to zero. Investors will be charged 1.5 per cent of the redemption amount if they hold the funds for less than seven days.
Unsurprisingly, the best equity sector was Chinese equity with an annual sales total of USD30bn. But Brazilian equity was second thanks principally to Japan and its historical ties with that country.