* Fidelity fund sees $814 mln net inflows this yr vs JPM
fund's $78 mln outflows
* Inflows come as fund outperforms benchmark, peers
* Assets of SE Asia-focused funds hit 4-year high of $7.8
bln in July
By Nishant Kumar and Charmian Kok
Sept 10 Money manager Fidelity saw a surge of
cash into a Southeast Asian equities mutual fund this summer,
helping it leap past $2 billion in size and overtake a long-time
leading rival product from J.P. Morgan.
Fidelity's ASEAN fund has attracted estimated net inflows of
$460 million in the last three months alone to become, for the
first time in more than six years, the largest fund focusing on
the region, data from Thomson Reuters Lipper showed.
The inflows underscore the popularity of Southeast Asia at a
time when key emerging market economies are seeing outflows. The
region of 600 million people has a combined economy of $2
trillion that is boosted by domestic consumption, public
spending and a growing middle class.
It also shows that Southeast Asian investors are getting
choosier, and gravitating towards better-performing funds.
"It's been a good story to market," Medha Samant, a Hong
Kong-based investment director at Fidelity Worldwide Investment,
said in a telephone interview.
"Clients are increasingly feeling that ASEAN markets are in
a much stronger position to weather a global economic downturn
compared to 10 years ago," she said.
Assets of Southeast Asia-focused funds tracked by Lipper
stood at $7.8 billion at the end of July, the highest since
December 2007. Other offshore funds investing into individual
countries in the region managed a further $16 billion.
More than 50 mutual funds focus on Southeast Asia stock
investments, nearly double from five years ago, and the inflows
for Fidelity and some others such as Japan's Daiwa will help
draw investor attention to the region as other Asian countries
such as China and India slow. The inflows could ultimately help
deepen the region's relatively illiquid markets.
Offshore equity funds dedicated to China and India saw a
combined $2.4 billion of net outflows, according to Lipper data.
Even offshore equity funds investing in emerging market such as
Brazil have seen net outflows worth $826 million in the first
seven months of 2012.
A prolonged period of weak performance has driven some
investors away from J.P. Morgan Asset Management's $2 billion JF
ASEAN Fund, leading to an estimated $78 million in
outflows in 2012 and benefitting the rival Fidelity product,
Lipper data showed.
The Fidelity Funds-ASEAN has grabbed $814
million, nearly three-fourths of the estimated $1 billion of net
inflows into funds investing in all of Southeast Asia this year.
"This may be attributed to the ability of Fidelity's fund
to consistently deliver better returns than the JF fund,
particularly since the first quarter of 2011," said Eric Wong,
head of Lipper Hong Kong research.
Fidelity's fund has gained 14.3 percent in the year to
end-August, helped by a 25 percent jump in top holdings such as
Singapore banks DBS Group and United Overseas Bank
By comparison, its benchmark MSCI South East Asia index is
up 13.6 percent. The J.P Morgan fund trails with gains of 12.8
percent during the period, Lipper data showed. The fund also
lags its benchmark over one-, three- and five-year periods.
Fidelity's fund managed $2.4 billion at the end of August,
while the one from J.P. Morgan had just over $2 billion. They
are the only two offshore ASEAN-focused stock funds with assets
of more than $2 billion.
"We saw some profit-taking in the first quarter since ASEAN
economies have performed well since the global financial
crisis," Pauline Ng, a managing director at J.P. Morgan Asset
Management, said in an e-mail. "Over the second quarter ending
June 30th, we have seen net inflows again."