Singapore Equity Funds Rise In 2012

Full Article here: Fundsupermart Singapore funds have kept ahead of the Straits Times Index in 2012, but all was not rosy a mere 12 months ago, when nearly all funds were beaten by the benchmark.

Author : Nick Tay KEY POINTS Back in 1H2011, nearly all Singapore funds were underperforming the benchmark Straits Times Index As at 1H2012, the situation has reversed, and nearly all Singapore funds have outperformed the benchmark Over an annualised 5-year period, Aberdeen Singapore Equity, Amundi Spore Dividend Growth, Schroder Singapore Trust Cl A xd, DWS Singapore Eqty Fd, and United Singapore Growth Fund have outperformed the benchmark Investors should be wary of letting short-term performance cloud their judgment, and consider funds that have shown consistent outperformance over long time frames for Singapore Equity exposure Echoing the general sentiment that pervaded markets in 1H2011, one forum post took aim at our efforts to reassure investors that their Singapore equity funds had not lost the plot. The comments were justified; after all over the 6 months that made up 1H2011, Singapore equity funds had failed to beat the benchmark by quite large margins. I wrote, perhaps unwisely, why we remained confident about the Singapore funds on the platform, and that in the short-term of 6 months, funds can and will underperform the benchmark, but quality funds will outperform over time. So rewind to 1H2011, nearly all Singapore equity funds lagged the market, as shown in Table 1. Table 1: Calendar Year Returns, 1H2011 Fund Return United Singapore Growth Fund 0.48% HGIF Spore Eq-A USD -0.53% FTSE Straits Times Index -0.66% Amundi Spore Dividend Growth -2.01% Schroder Singapore Trust Cl A -2.02% DBS Shenton Thrift -2.46% DWS Singapore Eqty Fd -2.66% Aberdeen Singapore Equity -3.52% LionGlobal Singapore Trust -4.28% JF Singapore A (Dist) USD -4.92% Outperformance in bold. source: iFAST compilations, in SGD, dividends reinvested So, as of July 2012, have Singapore equity funds emerged from the pits of 2011 to rise above the benchmark? ARISE IN 1H2012 For comparison, we look at 1H2012 returns. As at end-June 2012, here is how Singapore equity funds performed. Table 2: Calendar Year Performance, 1H2012 Name Return Singapore Dividend Equity Fund 26.16% Aberdeen Singapore Equity 22.22% Amundi Spore Dividend Growth 19.48% Nikko AM Shenton Thrift Fund 17.78% JF Singapore A (Dist) USD 17.31% DWS Singapore Eqty Fd 16.95% Schroder Singapore Trust Cl A Xd 16.29% LionGlobal Singapore Trust 15.73% United Singapore Growth Fund 15.11% FTSE Straits Times Index 14.74% HGIF Spore Eq-A USD 12.12% source: iFAST compilations, in SGD terms, dividends reinvested. It’s a near mirror image of 1H2011 performance. Nearly all Singapore equity funds, save for HGIF Spore Eq-A USD, beat the STI in 1H2012. Top of the list is the recently relaunched Singapore Dividend Equity Fund, managed by Nikko Asset Management Asia, with 26.16% return, beating the benchmark by more than 11pp (percentage points, the arithmetic difference between two percentages). Another strong performer is Aberdeen Singapore Equity, which held its position in our 2012 recommended funds list, while posting 22.22% returns year-to-date as at end-Jun 2012. And while I’ve singled out these two funds, it’s worth noting that nearly all funds posted strong benchmark outperformance. But as we’ve repeatedly preached, it’s important to not let a relatively short-term, 6-month spell of performance overshadow the long-term performance of these funds. We consider recent performance in the context of 5-years. LOOKING BACK 5 YEARS Table 2: Calendar Year Performance, End-2006 To End-June 2012 Name 2007 2008 2009 2010 2011 YTD Singapore Dividend Equity Fund 13.41% -55.16% 63.05% 11.49% -12.96% 26.16% Aberdeen Singapore Equity 15.95% -39.98% 66.85% 14.37% -15.83% 22.22% Amundi Spore Dividend Growth 20.64% -46.65% 68.07% 12.09% -16.59% 19.48% Nikko AM Shenton Thrift Fund 20.87% -54.95% 77.00% 10.54% -19.77% 17.78% JF Singapore A (Dist) USD 24.12% -58.91% 76.41% 14.51% -18.05% 16.95% DWS Singapore Eqty Fd 24.80% -48.89% 69.62% 11.56% -16.82% 16.29% Schroder Singapore Trust Cl A Xd 19.94% -44.83% 66.64% 9.91% -16.31% 17.31% LionGlobal Singapore Trust 18.61% -49.64% 70.12% 12.27% -22.76% 15.73% United Singapore Growth Fund 11.14% -48.20% 69.57% 12.72% -17.08% 15.11% FTSE Straits Times Index 16.63% -49.41% 64.49% 10.09% -17.04% 14.74% HGIF Spore Eq-A USD 21.78% -60.84% 83.01% 6.59% -17.53% 12.12% YTD figures as at end-June 2012. source: iFAST compilations, in SGD terms, dividends reinvested. Of note is the fact that by the end of 2011, five funds had emerged ahead of the STI, most of which have, at one point or another, earned recommended fund status. This is also reflected in their 5-year annualised returns. Table 4: 5-Year Annualised Return, End-July 2007 To End-July 2012 Name Annualised Return Aberdeen Singapore Equity 2.60% Amundi Spore Dividend Growth -0.55% Schroder Singapore Trust Cl A Xd -1.11% DWS Singapore Eqty Fd -1.93% United Singapore Growth Fund -2.60% FTSE Straits Times Index -2.94% Singapore Dividend Equity Fund -3.26% LionGlobal Singapore Trust -3.82% Nikko AM Shenton Thrift Fund -4.42% JF Singapore A (Dist) USD -5.69% HGIF Spore Eq-A USD -8.90%  Outperformance in bold. source: iFAST compilations, in SGD, dividends reinvested Aberdeen Singapore Equity, Amundi Spore Dividend Growth, Schroder Singapore Trust Cl A xd and DWS Singapore Eqty Fd all emerged significantly ahead of the benchmark. CONCLUSION 2012 has, thus far, vindicated an earlier statement that “If history rhymes, and each fund manager sticks to their established investment process, we can state with some degree of confidence that our recommended funds are likely to return to their benchmark-beating ways once again.” Of course, past performance being no guarantee of future performances, readers should avoid any hasty conclusions that the performances of 2012 herald an age of immense returns from Singapore Equity Funds (although we’d certainly not complain if immense returns emerge!), but we can draw a more modest conclusion – Singapore Equity Funds have shown the ability to generate outperformance over long time frames and investors willing to ride out the market volatility should consider them for Singapore equity exposure.