UOB Asset Management plans to set up a new Asia equity fund in August based on the assumption that regional economies will recover faster from the global recession than Europe or the US.
Vana Bulbon, the chief executive officer of UOBAM, said growth in Asia is expected to outpace Europe and the US, benefiting share prices across the region's markets.
Banks are a favoured investment, as their earnings are closely tied to economic growth.
Asian banks also boast healthy balance sheets and have relatively limited exposure to toxic assets when compared with their Western counterparts.
US banks continue to struggle with the burden of distressed securities, such as collateralised debt obligations and credit default swaps tied to the ailing housing market.
European banks have been affected by their exposure to Eastern Europe's sharp economic downturn.
UOBAM's existing foreign investment funds have performed strongly over the past quarter in line with the sharp rally in global equity markets, said Vana.
The company's UOB Smart Financial Opportunity Fund (UOBSFO) posted a 43.85 percent gain for the three months ending May 29, with net asset values rising to 8 baht per unit from 5 baht.
The fund currently has 40.11 percent of its portfolio invested in US assets, with Spain accounting for 13.86 percent, Iceland 12.62 percent, and England 9.78 percent.
UOBAM offers two other Asian-focused equity foreign investment funds. The UOB Smart Asia (UOBSA) fund has delivered three-month returns of 31.73 percent, while the UOB Smart Great China (UOBSGC) fund has a return of 35.4 percent.
"Investors who invested in UOBSGC at the initial public offering price of 10 baht per unit certainly have been hurt by the crisis, as net asset values now have fallen to 5.86 baht," Vana said.
"If an investor doesn't have the time to follow the market closely, then I believe the best strategy is to hold on to their investment, as we see the market rebounding to the IPO price within two years."
UOBAM also recently launched the UOB Super Strike (UOBSS) fund - a fund with a 10 percent target return for the first year.
If the fund reaches the target, it will automatically return funds to investors, otherwise it will reset to a 20 percent target over two years.
http://www.bangkokpost.com/business/economics/19499/uobam-plans-new-asia-equity-fund
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