The Southeast Asia asset management sector reports that investors had the lowest exposure to the stock market last year for four years – or the most conservative stance since the financial crisis year of 2008, according to Cerulli, the research firm.

The report found that strong equity market gains in countries such as Thailand and the Philippines did little to revive desire to hold equities when asset allocation was considered.

The report, Asset Management in Southeast Asia 2013, looks at the state of the mutual fund industry in five countries, namely Malaysia, Thailand, Indonesia, the Philippines, and Vietnam.

The report found specific drivers of each country’s fund management sector.

"The Philippines remain a relatively small market, while equity funds in Thailand took a hit, partly because of redemptions within the Long-term Equity Fund and Retirement Mutual Fund segment in 2012," Felix Ng, a senior analyst with Cerulli, who led the report.

The strong interest in equity trigger funds in Thailand also limited asset retention due to the inherent structure of such funds. In the meantime, "the recent sell-off in Indonesian equity is expected to create a drag on the country's equity fund AuM in 2013 as well, given the small exposure to overseas investment for its mutual funds”, said.

Growth

Some equity nervousness aside, the report predicts strong growth for the mutual fund sector in the next five years, with the region’s assets under management expected to show a compound annual growth of 13.2 per cent during that period, driven by rising affluence.

"Southeast Asia no longer lives in the shadow of its bigger and brighter siblings to the north. There is renewed vigor to the region, and this is evident through the wealth that is being generated," says Ken Yap, Singapore-based director and head of Asia-Pacific research at Cerulli.