Mutual fund industry rides through storms

Economy July 10, 2014 00:00


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ALL MUTUAL funds managed to show returns in the first half of this year, with equity funds leading the pack, according to Morningstar.

A survey by the fund-industry specialist showed that funds focusing on domestic stocks averaged 12.9 per cent for all stocks funds and 14.0 per cent for large-cap funds, compared with the SET Index’ 14.40 per cent in the period.

“The underperformance showed that most fund managers miscalculated the market trends,” Morningstar said in its report.

Trailing behind were gold and oil funds, with returns of 8.85 per cent and 7.44 per cent.

The mutual fund industry showed 17-per-cent growth, despite volatility in the Stock Exchange of Thailand. At the end of June, the net asset value (NAV) of all mutual funds stood at Bt3.6 trillion.

“All the credit went to everyone in the industry, which promoted investment and introduced products for investors, at a time when domestic equity investment witnessed great volatility,” Morningstar said in its report.

The most popular mutual funds were those in high-yield bonds. Offered only to accredited investors, more than 100 such funds were launched, accounting for more than one-fourth of the value of funds launched in the period.

Their aggregate NAV to date is more than Bt366 billion, or Bt3.6 billion each.

Next in line are funds in single countries or regions. The aggregate NAV of these funds rose by 71 per cent from the end of last year, pushing their aggregate NAV to nearly Bt60 billion.

This year 15 such funds were launched, drawing Bt22.98 billion. The funds investing in Europe accounted for Bt10.63 billion (46 per cent), Japan (15 per cent) and the United States (14 per cent).

Trigger funds are still doing well, but they are not as hot as last year. Most of them are also geared towards overseas investment, targeting new territories like South Korea, Germany and Europe.

In the period, 34 trigger funds were launched with NAV of more than Bt14 billion. Of those funds, 22 targeted overseas investment.

Mutual funds with a focus on Thai stocks attracted little investment in the period – only Bt2.1 billion. This was down 95 per cent.

Net redemptions from long-term equity funds were only Bt1.79 billion.

“It’s abnormally low and the lowest compared [with] the first half of the past five years,” Morningstar noted.

“Partially, investors may want to wait for a recovery in returns before unloading their unit trusts.”

Retirement mutual funds have also gained popularity. In the first half, net purchases of such funds totalled Bt1.77 billion.