Two new funds offered by krung thai

KTFIF1Y7, is a Bt1.6-billion fund with a 10-12-month maturity. Its investment focus will be foreign-government bonds, which will make up at least 80 per cent of the fund's net asset value while the remainder will be put into local government and corporate bonds with investment grade credit ratings.

The fund will be fully hedged in foreign currencies to reduce risk. Although the hedging cost between the South Korean won, and the US dollar is increasing, the cost between the dollar and the baht is declining, and net returns from South Korean bonds in terms of the baht remains high, Somchai said.

The latest net returns stand at about 4.5-4.7 per cent per annum.

KT3M39, is a Bt2-billion fund with a three-month maturity. This is a principal-protection fund, at least 98 per cent of which will be invested in local bonds, promissory notes and certificates of deposit issued by banks, finance companies and credit fonciers and other low-risk assets.

The fund is suitable for risk-averse investors, Somchai said, adding that returns were greater than those generated by commercial banks' time-deposit accounts.

For instance, three-month fixed-deposit accounts offer 2 per cent per annum and are subject to 15-per-cent withholding tax.

Somchai expects KT3M39's annual rate of return to be 3.1-3.15 per cent.

When KTAM's Global Treasury Fund was launched on May 26, the baht traded at 63.60 to the British pound, compared with 65.74 now. The fund has gained Bt2.14 against the pound. Fund investors can obtain a higher return than from bank deposits. Global Treasury Fund's net asset value per unit as of last Thursday was Bt10.1428.