Small funds fall out of favour with managers

[SINGAPORE] A number of fund management firms are taking a hard look at their unit trusts, and culling or restructuring the smaller funds that may not be viable.

Not only are small funds typically saddled with high expense ratios, which eat into returns, they are also likely to remain small. This is because distributors are reluctant to market funds that may prove unsustainable.

Nikko Asset Management has revamped a number of its offerings over the past year or two. Since then, its unit trusts' average size has doubled from about $50 million in 2008 to $100 million today. The number of funds has contracted from 50 to 40.