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Fund redemptions are not mainly about poor performance, says Cerulli survey


Almost 60% of Asian retail investors who have exited mutual funds do so because the funds have achieved their target returns. Slightly less than half exited due to poor fund performance, while two in five retail investors redeemed fund investments in anticipation of poor market conditions.

These are among the key findings of Cerulli Associates' inaugural report on Asian retail investors titled Asian Investor Segmentation: Unlocking Retail Investors Secrets. For this report, Cerulli surveyed 4,000 retail investors across wealth tiers in China, Hong Kong, Taiwan, and Singapore in mid-2014.

"A good sign for fund managers is that 60% of retail investors exited mutual funds because they had served the intended purpose. Satisfied customers will return at the next opportunity when a suitable product is offered," says Cerulli associate director Shu Mei Chua, who led the report.

Another key finding from the survey was that the mutual fund investors in the four countries tend to be younger than in Japan, where more than half of investors are more than 60 years old. In the four countries, four in five investors are less than 50 years old, with three in five less than 40 years old.

"There is some food for thought here, especially when dealing with redemptions due to market volatility. The younger demographic profile of mutual fund investors suggests that fund managers and distributors could step in to provide more hand-holding by providing timely financial advice during periods of market volatility," says Yoon Ng, Asia research director with Cerulli.

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