Published on January 26, 2006

Kasikorn Asset Management will open an offering of its ABF Thailand Bond Index Fund (ABFTH) between February 15 and 21, which is expected to raise between Bt4 billion and Bt6 billion on the secondary market.

Bandid Nijathaworn, deputy governor of the Bank of Thailand, said in a press conference yesterday that the fund was likely to grow annually by 15 to 25 per cent. Average debt-market growth is about 8 to 10 per cent.

He added that the exchange-traded fund (ETF) – which can be traded with real-time pricing – would be easier to access and should draw retail investors into new unit trust investments.

“The ETF is more beneficial than other bond funds as it is managed with an index called IBOX as the underlying index. This makes the ETF’s costs lower than other funds. In addition, liquidity is also high as it is traded on the Bond Electronic Exchange. This allows retail investors to access it easily,” Bandid said.

Kasikorn Asset Management executive vice president Yingyong Nilasena said yesterday that the fund’s credit risk would be zero because it would invest in government and state enterprise bonds, but that its price would be more volatile.

For example, she said, if interest rates rose, the net asset value (NAV) of the fund’s unit trust would fall farther than other funds’ NAVs, and vice versa if interest rates fall.

In the initial offering, money to set up the fund will come from the Executives’ Meeting of East Asia-Pacific Central Banks Forum (the central banks of 11 nations), market-makers and four authorised participants contributing Bt200 million each.

Dayana Bunnag, Kasikorn Asset Management’s managing director, said the fund would welcome foreign and local institutional investors as well as retail investors in a bid to boost its liquidity.

While short-term investments will likely be institutional, she said she expected individuals would gradually invest more in mutual funds, including debt instruments, as investors become more educated about them.

The ABFTH has been set up under the Asian Bond Fund II in cooperation with the 11 central banks, and with Kasikorn Asset Management as the fund manager.

Yesterday, Kasikorn Asset Management appointed three market-makers – Kasikornbank, Siam Commercial Bank and Deutsche Bank’s Bangkok branch – as well HSBC as an authorised participant.

Kasikornbank and Siam Commercial Bank were also appointed as underwriters for the fund, while HSBC will perform as fund supervisor and Thailand Securities Depositor will serve as registrar.

Anoma Srisukkasem

The Nation

Post your comment to this story here