Funds should offer good returns for investors

Mutual funds and provident funds this year should offer their clients better returns than other Thai institutional investors this year, should the stock market maintain the good performance witnessed in January.

This follows heavy investment in the stock market, which rose 5.5 per cent in just one month when the SET index ended at 1,474.20 points from the year-end close of 1397.19. The SET index ended last week at 1,497.30 points.

The SET Index rose 35.7 per cent in 2012.

According to UBS Research, as of November, mutual funds sat on total assets under management of Bt2.5 trillion and Bt534.92 billion or 20.99 per cent was invested in equities. Provident funds, as of September, invested Bt91.8 billion or 13.5 per cent of Bt682 billion AUM in equities.

Impressive return

The weighting in listed equities of Social Security Fund was 9.14 per cent, or Bt86.5 billion of Bt946 billion, as of September. Meanwhile, the 9.14 per cent or Bt38 billion of Government Pension Fund's Bt419.8 billion AUM is invested in equities as of October.

If anything, the impressive return should further boost the attraction of mutual funds, an industry which has been expanding fast in the past year. Total assets under management of the industry rose 55 per cent in five years, from Bt1.6 trillion at the end of 2007 to Bt2.5 trillion in November last year.

Cashing in on the trend, Krungthai Asset Management just sold Bt3 billion worth of unit trusts for its KT-Trigger9 and plans the 10th fund this week worth another Bt3 billion. Both funds are to invest mainly in Thai equities. KT-Trigger10 aims to generate 8 per cent in return in eight months.

Somchai Boonnumsiri, CEO of the fund company, said that the stock exchange's outlook remains bright despite the sharp spike re-cently. Factors to boost the market are liquidity through low interest rate policy and inflows, while the US, China and the euro zone should have gone through the worst. Meanwhile, the Bt2.27 trillion infrastructure investment should further strengthen the country's long-term outlook.