Published on June 27, 2005

While the stock market has slowed down, fixed-income and property funds have done well, growing more than 100 per cent, Kasikorn Research Centre said last week.

The performance of the mutual fund industry was up 20.1 per cent this year in the period to June 17.

Net assets of fixed-income funds have soared 89 per cent from the beginning of the year and 126 per cent from a year ago on uncertainty in the stock market. Many asset-management companies have responded by launching short-term fixed-income funds maturing in less than one year. More investors want these short-term funds as they provide higher returns than one-year bank deposits, which earn 1-1.25 per cent.

Property funds have also witnessed a remarkable year so far, growing 186 per cent from the end of last year and 138.5 per cent from a year earlier. Four property funds have been launched so far, including two this year.

Property funds have become an alternative investment channel for medium- and long-term investors, who prefer higher returns than fixed-income funds but less risk than stocks.

The uncertainty of the stock market left equity funds down by 6.7 per cent since the end of last year and by 2.6 per cent from a year ago.

Kasikorn Research Centre said that mutual funds were expected to improve on their performance in the first half, growing more than 20 per cent in the rest of this year, thanks to help from long-term equity funds (LTFs), retirement mutual funds (RMFs) and foreign funds.

The centre also forecast that the economy would grow by about 4 and 5 per cent in the third and fourth quarters, respectively.

Although the Bank of Thailand has raised interest rates twice this year, most banks show no signs of adjusting interest rates on their savings accounts. They claim that the market still has surplus liquidity.

That means the bond market will remain an interesting option for investors.

Reungvit Nandhabiwat, managing director of Ayudhya JF Asset Management, said last week that foreign funds presented an interesting choice for those investors who lack confidence in the domestic market or like to try something new.

“Investing in foreign funds provides more choices and opportunities that are rare in Thai funds,” Reungvit said.

He also said that LTF and RMF funds would soon perk up. Since both provide a maximum income tax exemption of Bt300,000, they will attract more investors towards the end of the year.

Piyarat Setthasiriphaiboon

The Nation

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