Market volatility calls for careful portfolio rebalancing

PETALING JAYA: As the global equity markets ended the year 2011 with
less-than-stellar performances, it would be wise for investors to
reassess their investments and rebalance their portfolios to ensure risk
levels are in line with financial goals and factor in market
conditions, says Pacific Mutual Fund Bhd.
“As
certain investment categories may not have performed to expectations in
highly volatile market conditions amidst several crisis stories, it is
essential that investors continue to practice portfolio rebalancing or
revise their investment style.
“This is to ensure that their
investments are in a proper mix of asset classes – be it in equities,
money markets, bonds or cash – and the accumulation strategy is one that
is suited to address the severe volatility,” said executive director
and chief executive officer Gary Gan.
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“It
may seem petty and some may not even practice it, but market behaviour
these days is highly irregular and there can be an abrupt significant
increase or decrease in the value of any asset class even on monthly
basis, let alone over the year.”
Gan said the company had seen a
significant change in investors’ investing style, especially over the
past two years, where regular investing strategies over a diversified
range of fund categories had hit record levels in terms of volumes,
average size and accounts.
“The positive note of all this is that
despite the obvious distress in equity markets and waning sentiment of
late, most of our investors remain invested and there is no mass panic
to exit.
“In addition, we have seen the importance of the boring,
old money-market fund in times like these and how it adds value to the
entire portfolio mechanics,” he said.
Despite the severe market volatility in 2011, Pacific Mutual’s funds managed to generate decent incomes.
It has announced income distributions amounting to RM19.68mil for three of its funds for financial year ended Dec 31, 2011 – Pacific Dividend Fund 5 sen per unit, Pacific Cash Fund 0.40 sen per unit (quarterly distribution) and Pacific SELECT Bond Fund 1.30 sen per unit (quarterly distribution).
Pacific Mutual, the investment arm of PacificMas Bhd and a member of the OCBC Group, manages 29 funds, including 14 with foreign investment mandates and two wholesale funds.
The company also manages private mandates under its asset management business. — Bernama