KUALA LUMPUR: Demand for fixed income funds is expected to increase this year due to its stability and consistent return amid volatility in the equity market and global economic uncertainty.
“Diversification, low uncertainty and income streams are among the factors why investors have shifted their focus to fixed income funds,” Hwang Investment Management (HwangIM) assistant portfolio manager Khoo Nee On told Bernama on the sidelines of the PhillipCapital 2012 Investment Seminar.
He said global fund investors were increasing interested in fixed income from the emerging markets, driven by better fundamentals there and the consistent returns they would be receiving.
“That’s why they are willing to put their money in these funds,” he said.
He said foreign interest in the Malaysian Government Securities (MGS) had also increased to 30 per cent as of today, compared to less than 20 per cent in the past.
“Since last year, we have seen the ringgit strengthen dramatically. So, because of the currency’s strength, the corresponding interest in the MGS market has also increased.
“This is because we don’t just get the return on bonds but also gain on the currency. That’s why foreigners, especially foreign banks have shown more interest in the MGS market,” he said.
Khoo, who is one of the speakers at the seminar, said capital preservation offered by fixed income funds was the key factor why investors should consider investing in the funds.
“Fixed income also offers you peace of mind because you know what the coupon that you’ll receive and at maturity, you also will get back your capital,” he said. — Bernama