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You may have noticed a new section on our homepage showing the performance of the FEFI (SG). Here are some things that you probably would like to know about this new feature.

What is the FEFI (SG)?

We have recently launched the FSM All-Equity Fund Index (abbreviated FEFI). This is a special index whose returns are aligned with the underlying unit trust instruments which are available for sale to FSM investors. The FEFI (SG) tracks the equal-weighted performance of all unique equity funds available on our platform, and returns are in SGD terms.

Why the FEFI (SG)?

There is currently a lack of publically-available resources for the tracking of unit trust performance in Singapore. With the growth of the unit trust industry, we see the need for a benchmark which caters specifically to fund investors. The FEFI (SG) represents the aggregate performance of equity unit trusts listed on our platform in Singapore, and our investors (who are invested in a portfolio of equity funds) can look to the FEFI (SG) as a benchmark for investment performance. Investors can view the daily index level on our website, along with the most recent 1-month performance. A 1-year performance chart of the FEFI (SG) is also available.

What is in the FEFI (SG)?

As at 31 December 2008, the index contains 228 unique equity funds, all of which are available to investors on the FSM platform. The breakdown of the index is shown in Chart 1. The majority of the equity funds in the FEFI (SG) are invested in the Asia ex-Japan region (43%) while equity funds with a global scope make up the next largest group (26.3%).

The index contains all unique and available-for-sale equity funds on our platform, and contains regional, single-country as well as sector funds. The breakdown is given in Chart 2. Chart 3 shows a further breakdown of the sector funds within the index.

How often is the index calculated?

The index is calculated on a daily basis. Due to the forward-pricing nature of unit trusts, the “live” index level of the FEFI (SG) will be delayed, so the index level is shown with the corresponding date. On days when less that 80% of the funds in the index have no pricing, the FEFI (SG) will not be calculated.

Monthly Index Performance Review

A monthly index performance review will be put up on the web at the end of every month, where we look at the top and bottom performing funds in the index for the month. The index was only recently launched in February 2009, so our first performance review involves the year-to-date performance up to the end of February 2009.

Performance Review of the FEFI (SG) as at end February 2009

The FEFI (SG) was incepted at 1,000 points on 31 December 2008, but with index levels backdated to 2003 (See Chart 4). The index hit a high of 2172.86 on 29 October 2007, but has now declined to the current level of 921.57 (as at the end of February 2009), a decline of 57.6% from the peak. Equity markets were roiled by the financial crisis in the US, and the FEFI (SG) lost 50.6% in 2008, compared with major equity market indices like the MSCI Asia ex-Japan’s 53.7% decline, and the MSCI World index which shed 42.2%. (All returns are in SGD terms)

2009 has not been a better year for stock markets thus far, and equity funds have taken a substantial beating. Year-to-date (as at end February 2009), the FEFI (SG) has declined 7.8%, with a 5.7% decline in February alone (See Chart 5). Financial funds have been a key detractor to the performance of the FEFI (SG) in 2009. Financial funds listed on our platform declined 28.9% on average on a year-to-date basis as at end February, but this is not surprising given the concerns over the escalating concerns over the sustainability and solvency of the sector.

Emerging Europe was also an area of weakness, as foreign debt concerns and declining currencies led to a poor performance for funds in the sector. The Parvest Converging Europe fell 31.2% in the first two months of 2009, while funds invested in Western European countries like Fidelity Germany (-21.2%), Fidelity Italy (-16.8%) and Fidelity France (-16.5%) have also experienced significant declines, possibly on concerns over emerging Europe debt exposure.

Funds invested in real estate and property like the United Global Real Estate Securities fund (-23.4%), RREEF Global Real Estate Income Securities fund (-22.2%) as well as the Henderson Global Property Equity fund (-21%) were a drag on the index, as the sentiment on real estate and property developers remained poor in 2009. Given the severity of problems in the global economy, rentals have been under pressure and issues like debt refinancing have arisen, adding on to the worries in the property sector.

On a more optimistic note, the AllianzGI Global Internet fund was a strong outperformer, returning 10.2% year-to-date (as of end February 2009). Other positive contributors to the FEFI’s performance include funds invested in the resources sector, like the DWS Noor Precious Metals (+7.9%), First State Global Resources (+6.7%) and the UOB United Gold & General Fund (+5.2%). Gold prices have held up strongly in the range of US$900-1000 while commodity prices appear to have found a near-term bottom, lending some support to the sector.

Related Articles:

FSM All-Equity Fund Index (SG) Methodology

FSM Fund Indices