Thai players urged to turn to foreign investment funds

Economy January 17, 2014 00:00

By The Nation

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Investors should go into foreign investment funds to diversify risk because local funds are not likely to assure healthy returns due to the prolonged political unrest, according to Thanachart Fund Management.

“Thai investors have preferred investing local. They should change their mindset due to the political uncertainty. Furthermore, assets in Thailand are small, no more than 2 per cent of global GDP, so Thai investors should consider the international market, which is large with greater opportunities,” managing director Boonchai Kiatthanavith said yesterday. 
The economic outlook this quarter is dour from downside factors, which need to be closely monitored, especially the political turmoil. Domestic political unrest has affected the Thai stock market, as reflected in the volatility this week.
Looking overseas, especially at the US and the European Union, which are showing recoveries, could be the choice for Thai investors who are seeking high returns and also diversification of risk from investing only at home.
To deal with the global economic recovery, Thanachart is offering many foreign investment funds such as the Global Equity Fund, which will allocate at least 65 per cent of its assets to global mutual funds.
At present, 50 per cent of T-GlobalEQ is invested in mutual funds in the US, 30 per cent in the EU and the rest in Asia-Pacific.
According to SCB Asset Management, property funds, real estate investment trusts (REIT) and infrastructure funds are attractive for investors who want to reduce risk from the current market situation, particularly from the political unrest.
Jotika Savanananda, president of SCBAM, said those funds have a policy to pay out 90 per cent of profits as dividends, ensuring that investors will earn healthier returns than other financial instruments. 
SCBAM claims to be the market leader in property and infrastructure fund management last year, with assets under management (AUM) in those two types of funds totalling over Bt70 billion.
Property funds 
The company last year was appointed the manager of four property funds and one infrastructure fund worth Bt71.60 billion. At year-end, its AUM rose to Bt797.58 billion. 
Competition in the industry should be intense this year. Three new funds approved by the Securities and Exchange Commission (SEC) last year will be launched this year, besides the capital increases by existing funds such as the CPN Retail Growth Fund (CPNRF) and Prime Office Leasehold Property Fund (POPF).
Last year, many property funds were brought to market, as the SEC’s new rules will allow only REITs. Out of 11 companies planning property funds last year, six were approved by the SEC. SCBAM aims to attract property funds, REITs and infrastructure funds worth at least Bt15 billion this year.