Home
 Portfolio Manager
 Fund
 ETF
 Insurance Linked Funds
 Fund Tools
 Fund Selector
 Funds to Explore
 Category Quickrank
 Guaranteed Funds
 

[Video] Mind the Gap – Asia 2017

This paper seeks to explore whether investors within the open fund markets in Asia, namely Hong Kong, Singapore, and Taiwan, suffer from their market timing decisions. 

Since 2005, Morningstar has published annual “Mind the Gap” studies that aim to shed light on whether U.S. mutual fund investors have benefited from their market timing decisions. This year, we “globalised” the study to find out if mutual fund investors in other markets have also suffered from returns gaps—that is, the difference between a fund’s time-weighted return, and the “actual” return that investors achieved when timing decisions are taken into consideration.

This paper seeks to explore whether investors within the open fund markets in Asia, namely Hong Kong, Singapore, and Taiwan, suffer from similar returns gaps.

Mutual fund investors in Hong Kong, Singapore and Taiwan tend to have shorter investment horizons. However, practice doesn’t make perfect with our study confirming that Asian investors face similar challenges in timing their investments, and that the gaps in returns were largest in more volatile, concentrated equity strategies.

Investing is a beautiful game but when fear and greed take over, investors make mistakes. They sometimes buy into an investment after it has run up on price, but panic during market turmoil and sell out at a loss. This contradicts the notion of buying low and selling high, and Exhibit 1 shows an example of this phenomenon. The blue line shows the performance of a popular Asian ex-Japan equity fund between 2007 and 2009, while the bars depict the monthly net flows of the fund. It quickly becomes evident that investors are poor market timers; there were massive inflows in September/October 2007 when the fund performed strongly at the peak of the bull market, and investors did not re-enter the fund until fund performance rebounded on the back of the market run-up in 2009.

You can download the complete report here.

 

About Author  Morningstar Analysts

Morningstar Analysts  

 -

  • [Video] Mind the Gap – Asia 2017 [Video] Mind the Gap – Asia 2017

    This paper seeks to explore whether investors within the open fund markets in Asia, namely Hong Kong, Singapore, and Taiwan, suffer from their market timing decisions. 

  • [Video] Asian Equities Asset Class Spotlight – 2017 [Video] Asian Equities Asset Class Spotlight – 2017

    We recently publish the second edition of the "Asian Equities Asset Class Spotlight," an annual publication that aims to showcase our insights and observations about this growing asset class. This follows the completion of our annual review of almost 50 strategies across four Morningstar Categories: Asia ex-Japan Equity, Asia Pacific ex-Japan Equity, Asia Pacific inc. Japan Equity, and Asia ex-Japan Small/Mid-Cap Equity.

  • 10 Most Popular Funds in May 2017 10 Most Popular Funds in May 2017

    10 Most Searched for Funds by sg.morningstar.com users

  • [Video] The Many Dimensions of Sustainable Investing [Video] The Many Dimensions of Sustainable Investing

    norms-based screening; divestment; socially responsible investing; factor-based or thematic investing; ESG investing; best-in-class investing; active ownership; impact investing……learn about the nuances of the sustainable investing landscape

  • Morningstar Research Identifies A Withdrawal Rate for Japanese Retirees Morningstar Research Identifies A Withdrawal Rate for Japanese Retirees

    Morningstar has released new research that identifies a lower safe withdrawal rate for retirees in Japan. For this research, Morningstar defined a safe withdrawal rate as the amount a retiree can withdraw each year while safely expecting their savings to reach the end of retirement. 

  • MSCI Takes a Step to Bring China A-Shares Into the Fold MSCI Takes a Step to Bring China A-Shares Into the Fold

    The near-term impact will be small, the long-term implications could be tremendous

  • Three Shades of Value (Part 2) Three Shades of Value (Part 2)

    The different methodologies used by value funds can affect their style tilt and performance.

  • [Video] Mind the Gap – Asia 2017 [Video] Mind the Gap – Asia 2017

    This paper seeks to explore whether investors within the open fund markets in Asia, namely Hong Kong, Singapore, and Taiwan, suffer from their market timing decisions. 

  • Three Shades of Value (Part 1) Three Shades of Value (Part 1)

    The different methodologies used by value funds can affect their style tilt and performance.

  • [Video] Asian Equities Asset Class Spotlight – 2017 [Video] Asian Equities Asset Class Spotlight – 2017

    We recently publish the second edition of the "Asian Equities Asset Class Spotlight," an annual publication that aims to showcase our insights and observations about this growing asset class. This follows the completion of our annual review of almost 50 strategies across four Morningstar Categories: Asia ex-Japan Equity, Asia Pacific ex-Japan Equity, Asia Pacific inc. Japan Equity, and Asia ex-Japan Small/Mid-Cap Equity.