Asian mutual fund investors retreat to home markets

Chinese indicesAsian retail investors are pulling money out of growth funds after global and emerging markets worried them.

Local equities and income funds are in favour and investors expect them to yield 26%, a study finds.

As well as income funds, mutual funds targeting a mix of income and growth are also seen as a safe-haven, the Eastspring Investment research reveals. The research is based upon 2,400 mutual fund investors in six Asian countries.

Broadly, Asia Pacific and China, as well as local equities, remain in favour.

For example, Hong Kong investors are very confident in local and Chinese equities with nearly half expecting a yield of up to 20% in the second half of 2015.

In Korea, mutual fund investor interest in growth funds has dropped from 27% to 18% over the last two years, with income and balanced funds growing in popularity.

An exception to the home-bias trend is Malaysia, where the portion of portfolios allocated to local equities is expected to fall from 70% to 59% before the end of the year as investors look to diversify with offshore strategies.

Michele Bang, deputy chief executive officer at Eastspring, says recent market events have affected investors’ traditional choices.

The Eastspring Mutual Fund Investor Behaviour Study was conducted after the start of the Chinese market crisis, throughout July and August 2015, among retail investors in Hong Kong, Singapore, Korea, Taiwan, Malaysia and Indonesia.

Eastspring Investments is the Asian asset management business of insurance company, Prudential.

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