'Good shares are there, do your homework'

Investors can invest in some bond funds to lock in high yields or to start picking stocks that have potential to rebound sharply when the economy recovers, says a fund manager

THERE are some good local shares to buy now, but doing enough homework to pick the right stock is more important than ever, a fund manager said.

Yoon Mun Thim, the chief investment officer of Prudential Fund Management Bhd, said holding cash may not be the best option for investors even in this time of uncertainties.

"Cash is king, but for how long? There's an opportunity cost for 'safety'," he said in a media session on 2009 outlook in Kuala Lumpur yesterday.

Compared to the higher fixed deposit (FD) rates of between six and 10 per cent during the 1998 Asian financial crisis, the 12-month FD rates have stayed low at around four per cent in recent years. This means holding cash is a less attractive option compared with before.

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Depending on the individual's risk appetite, he said investors can invest in some bond funds to lock in high yields, or to start picking stocks that have potential to rebound sharply when the economy recovers.

"Bonds still give more certainty than shares as long as you choose carefully papers from companies that won't default. Stocks, you could risk getting in too early, so one must be prepared to hold for the medium to long term," Yoon said.

He said Prudential adopts a bottom-up approach to pick stocks now, instead of choosing stocks from industries that are likely to perform well.

Investors can look out for certain winner traits in companies that will survive the economic turmoil, he said, such as having good products and management style, and a strong balance sheet to acquire rivals to expand when times are difficult.