Given that the market has plummeted almost 140 points in the last month, this is quite a good time to invest some of your savings into LTFs rather than waiting till the end of the year.

Whether they invest now or at the end of the year, investors will receive tax rebates, a special treat from a government trying to encourage people to shift their savings into the capital market.

But the difference between investing now and investing at the end of the year is price.

LTFs require investors to park their money in the funds for at least five calendar years. That's why most people buy LTFs at the end of the year as that would count as the first year and they could therefore redeem them early in the fifth year. This way, their money is invested for virtually only three years.

When the money enters the fund, the fund manager needs to invest based on the prospectus saying that at least 65 per cent of the money must be invested in equities.

In order to receive tax rebates, those who buy an LTF must hold the unit trust for five calendar years.

So, if you invest today, you can redeem your investment starting January 2010. You can redeem it before the five years is up but you will forfeit the tax privileges on any profits you might earn.

This rule matches the theory of many financial experts that investing in the right stocks will give you a guaranteed return if you invest for the long term.

In October last year, Personal Finance ranked the performance of all LTFs available in the industry. Nine months have passed and the top four positions remain unchanged.

Back then there were 22 LTFs in the market. As of June 16 there were 30 LTFs run by 18 asset-management companies with a total net asset value (NAV) of Bt15 billion.

The 8.6-per-cent drop in the NAV since the end of April was mainly driven by the hefty inflation-inspired sell-offs by foreign investors in the stock market.

Since January, most LTFs, especially those with investments tied to the general movement of the Stock Exchange of Thailand's SET50, have outperformed others due to the inflow of funds from foreign investors that drove the index beyond 700.

However, the recent heavy sell-off has sent every single LTF diving south. Some fell quickly, others slowly, depending on the strategy of each asset-management firm.

Aberdeen Asset Management let its LTF speak for itself.

With no bank support or any other business unit to help, the London-based company has managed to top the table consistently since last year, maintaining its position when the SET rose to 785.38, its peak so far in this year, and when it plunged to 646.69 early this month.

Less than two years since its inception, Aberdeen's LTF achieved more than a 50-per-cent return as of the time when the market peaked. Despite the overall market having plummeted, it is still in the black to the tune of 30 per cent since its inception.

TMB Asset Management's two Jumbo25 LTFs and Tisco Asset Management's LTF remain in the same positions they were at nine months ago. Notably, these top four LTFs didn't cling on to SET50 stocks like most of the other LTFs.

That is why, even in the current market doldrums, these four managed to protect themselves from a bad fall.

But, there has been some movement among the remaining 20 LTFs. Their NAVs are relatively low and hence the funds are relatively cheap.

The NAV of some LTFs has already retreated below the initial public offering price of Bt10 per unit.

Every LTF wants to impress investors, so the market plunge this time will be a great lesson for fund managers in tending their investment portfolios.

However, they need more investors if they are to improve.

If you are not sure which long-term fund to choose, you can read the prospectus and fact sheets of the funds, which are available at every asset-management firm's website.

After reading through them, you can call their marketing departments and ask any other questions you might have, so you can be sure to get the LTF that best matches your needs.

If you plan to invest in an LTF this year, this is the right time.

If you are not so sure whether the market will plunge further than this, you can gradually invest by using the dollar-cost averaging method. This is a periodic investment of a fixed amount, as in a particular stock or fund or in the market as a whole.

That's one way savvy investors play it safe.

This is recommended on the basis that the average value of the investment will rise over time and that it is not possible to foresee intermediate highs and lows along the way.

The initial minimum investment for each LTF is different, but the lowest starting amount is Bt2,000.

The tax rebate, which can be up to Bt300,000 a year, is based on the amount invested and the rate of income tax applicable to the individual investor.

Piyarat Setthasiriphaiboon

The Nation