Taiwanese investors are showing declining interest in mutual fund products in the second quarter from the first quarter, as plans by the US Federal Reserve to cut quantitative easing (QE) trigger a fund flight, the local unit of JPMorgan Asset Management said yesterday.
The fund house’s latest regular savings plan (RSP) index, a gauge of investor interest in mutual fund products, stood at 53 in the second quarter, down from 55 in the first quarter, as investors turn cautious about liquidity momentum once the QE exit takes effect, the report said.
The index, which derives its value from quarterly surveys on the number of RSP depositors and amounts deposited, as well as new RSP accounts, came as a sizable number of investors decided to cash out or stop losses in the wake of market volatility, JPMorgan said.
A score above 50 suggests active demand for mutual funds and a lower score indicates contracting interest.
The sub-index on the prospect of savings plan product sales dropped 14 points in the second quarter from three months earlier, whereas the number of depositors climbed to 1.55 million and the total value rose to NT$9.95 billion (US$332.31 million), the report said.
The findings, based on a survey of 3,163 investors conducted between July 5 and July 12, lent support to increasing maturity among local investors, as many opted to take profits in anticipation of a price correction as the QE exit looms, the report said.
“While regular savings plans are a good long-term investment tool, investors still need to adopt a policy on when to take profit and stop losses to maximize gains,” JPMorgan Taiwan vice president Alex Chio (邱亮士) said.
Funds targeting markets in Southeast Asia, Greater China and even Europe have gained substantial value over the past year, making it desirable to cash out and rejoin on a pull-back, Chio said.
The recent turnaround in bond yields at home and abroad has prompted the Financial Supervisory Commission to adopt a strict review of bond issuance applications.
To encourage caution, the regulator said it would spare fund houses punishment if they withdraw issuance applications. Previously, fund houses could not apply to issue new funds for three months upon voluntary withdrawal.
At present, 11 new funds valued at NT$190 billion waiting for regulatory approval. Some fund houses have postponed raising new funds for fear of a cold reception amid market volatility.
Looking forward, about 29 percent of investors indicate willingness to resume or increase regular savings plans, JPMorgan’s survey showed.
The finding bodes well for RSP products in the next quarter, Chio said.