Best and worst: Unit Trust Performance

TOP and bottom positions in the performance table for unit trusts over the month to 1 February were heavily influenced by sudden reversals of fortune on the stock markets of two of the principal economies in the Far East, observes Caroline Merrell.

The Japanese market had been a poor performer in recent years, but it moved sharply upwards in January, while Malaysia, which had been among the best performers, fell off by about 18 per cent.

The result was that 21 of the top 25 performers among unit trusts for the month were those invested in Japan, while the funds at the bottom for the month were mainly invested in Singapore and Malaysia - or in Japanese hedging funds designed to fall when the market rises or rise when it falls.

NM, which manages a Singapore and Malaysia fund, described the one-month fall as a minor setback. It said that the market would have been hit by profit-taking from foreign share buyers, and that returns to investors would have been further depleted by the depreciation of the Malaysian ringgit.

Richard Royds, managing director of Mercury, said: 'We are happy that the Mercury fund is at the bottom. It is designed to behave that way. The fund sells when the market rises.' He said the fund was mainly used by institutions and he was campaigning to have the hedging funds taken out of statistics.

The performance of South Korean funds was boosted by a change in the way they are allowed to show prices. Stephen Burr, director of Barings, pointed out that there is limited stock in South Korea for foreign investors, and said: 'All this money moving in is driving up the price of shares to a premium for foreign investors.'

He said the premium was not been adequately reflected in the price of the funds, and that UK fund managers had been lobbying Imro to allow for this premium of about 11 per cent to be included.

Fund managers said the long-term outlook for the Korean market was good.

----------------------------------------------------------------- UNIT TRUST PERFORMANCE ----------------------------------------------------------------- The best % 1 Waverley Australasian Gold. . . . . . . . . . .38.35 2 Baring Korea. . . . . . . . . . . . . . . . . .30.60 3 GT Korean Securities. . . . . . . . . . . . . .21.95 4 Laurentian Japanese. . . . . . . . . . . . . . 19.87 5 Edinburgh Tokyo. . . . . . . . . . . . . . . . 19.24 The worst 1388 Mercury WT Japanese. . . . . . . . . . . . -13.11 1389 NM Singapore & Malaysian. . . . . . . . . .-13.37 1390 Govett MIS Japan Bear. . . . . . . . . . . -14.68 1391 Fidelity Asean. . . . . . . . . . . . . . .-14.72 1392 Fidelity Japan Reverse Index. . . . . . . .-16.05 ----------------------------------------------------------------- The chart shows performance over one month until 1 February 1994 (offer to offer; net income reinvested). ----------------------------------------------------------------- Source: Micropal -----------------------------------------------------------------

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