Thailand's stock market expects the launch of four exchange-traded funds in the first half of the year, tracking banking shares and prices of commodities like agricultural goods and gold.
Stock Exchange of Thailand president Patareeya Benchapholchai said a few asset-management companies had expressed interest in launching more ETFs.
The mutual funds are designed to be like listed stocks. While investors can trade the unit trusts on a daily basis, prices will move in line with the underlying stocks.
At present, Thailand has three ETFs based worth about Bt3 billion on the SET 50 Index, following energy and large-capitalisation stocks. Worldwide, 1,907 ETFs worth US$982 billion (Bt32.45 trillion) were listed last year.
Securities and Exchange Commission (SEC) senior assistant secretary-general Pravej Ongartsittigul said ETFs could be a choice for diversifying risk.
To support the funds, the SEC will relax issuing rules, allow the trading of foreign ETFs on the Thai bourse and promote the trading of Thai ETFs abroad.
"Success lies in the clarity of the underlying stocks, as investors must know all of the stocks tracked by the ETFs. Moreover, issuers need to work hard to attract investors," Pravej said.
Joseph Ho, head of ETF sales and marketing for Asia outside of Japan at SG Securities (Hong Kong), said with their first global launch in 1993, ETFs failed to win investors' attention, because the stock-market returns remained low.
They became more attractive in 2000, when investors sought more transparent financial products. Their popularity spiked during the US economic crisis.
The US remains the world's largest ETF market, with $665 billion worth of assets under management as of last November 30, up 34 per cent from 2008.
While the global mutual-fund industry experienced net redemption, exclusive of ETFs, of $13.3 billion last year, global ETFs registered net inflows of $ 93.8 billion.
In the Asia-Pacific excluding Japan, asset value rose 61 per cent to $38 billion, with the number of ETFs rising from 96 to 127.
ETFs would be successful if they contained economies of scale, plus cross listing would propel their popularity, Ho said.
