By Gabriel Chen

ABOUT $1.5 billion flowed out of Singapore unit trusts in the fourth quarter last year, but fund managers are cautiously optimistic about investment opportunities, especially in Asia's emerging economies.

However, they also acknowledge that with global stock markets nosediving in the downturn - they call it 'the fear crisis' - these are certainly trying times.

'Our funds, even the balanced ones, suffered losses last year,' said Mr Daniel Chan, chief investment officer of Lion Global Investors, which won 13 individual prizes yesterday at the Edge-Lipper Singapore Fund Awards.

'Nobody knows when the market will bottom but the economic environment is still very challenging while valuations are already down a lot.'

Even star fund manager Mark Mobius, executive chairman of Templeton Asset Management, is seeing year-on-year declines for several of his funds, but he is not panicking.

'Sure, there's a great deal of uncertainty out there, but we're telling clients if you're looking at the short term, forget it,' he told The Straits Times yesterday. 'What we're saying is that this thing can turn around very rapidly.'

Both Lion Global Investors and Franklin Templeton won 13 individual awards - the highest number presented to a single fund company this year.

The event was held at Thomson Reuters' office at One Raffles Quay. Lipper is a Thomson Reuters company.

UOB clinched the Best Overall Fund Group award for delivering consistently strong performance in the bond asset, equity asset and mixed asset groups.

UOB Asset Management's managing director and chief investment officer, Mr Thio Boon Kiat, said that sector and stock selection will be more critical than country selection this year.

'We also believe that most portfolios could benefit from some holding in gold and gold equities,' he said.

Defensive sectors with low operating and financial leverage like health care and consumer staples are preferred, he added.

Mr Thio's analysis has been paying off. One of his top-performing equity funds over a 10-year period - UOB United International Growth Fund - has been benefiting from defensive plays in the past year.

Its key holdings include Colgate-Palmolive, China Mobile, tobacco firm Philip Morris International and General Mills, which markets and distributes cereals and snacks.

Data from online unit trust firm Fundsupermart shows that the UOB United International Growth Fund had an annualised return of 1.19 per cent a year over a 10-year period, as of Feb 20.

Schroders Singapore's managing director Susan Soh said its team began last year with an 'appropriately negative view' on the macroeconomic situation.

She said that this view penalised the team early in the year when the bets on interest rate cuts fell short as governments focused on inflationary concerns but the team later enjoyed the fruits of its 'positioning'.

'By the third and fourth quarters, the positions established by the team were leading to benchmark-beating returns in our intermediate and longer-duration portfolios,' she said.

Ms Soh remains positive on bonds, with a preference for investment grade and high yields.

'Valuations in these sectors are looking attractive given that spreads are at historically wide levels,' she said.

Schroders clinched the Best Bond Fund Group award.

This article was first published in The Straits Times.