Most Thai investors are familiar with traditional investments like bonds and stocks. However, retail investors can feel like they're in a desperate situation when the stock market sends them for a roller-coaster ride, as it has since the beginning of the year. To make matters worse, the fixed-income market still doesn't provide satisfactory returns.

According to brokerage MFC Asset Management, those who invested in the Stock Exchange of Thailand in 1999 and have kept their money in it ever since, will have generated on average return of 113 per cent. During the same period, the bond market produced an average 47-per-cent return.

It would have been nice if you'd invested in the SET at the start of 2003, a year when the bourse generated a 116.6-per-cent return.

But if you remained in the market the following year, your investment would have been eroded by 13.5 per cent.

To avoid such volatility, investors have been told time after time to diversify their investment portfolios.

Apart from these two financial channels, do Thai investors have other investment choices?

Supakorn Soontornkit, executive senior vice president of MFC Asset Management's research and strategic department and financial engineering department, suggested other investment vehicles like global investments, real estate, commodities, absolute return vehicles and private equities.

Some investors may know about global investments through mutual funds that invest in foreign investment funds (FIFs).

There are two ways to invest in real estate: directly buying property or indirectly by investing in real-estate mutual funds. In the United States, the latter investments are made through vehicles called real estate investment trusts.

Absolute return vehicles are an investment that uses derivatives as a way to hedge risk. Private equities are another way for companies to raise capital outside the stock market by selling shares or stakes to private investors or venture capitalists.

The funds raised through private equity can be used to develop new products and technologies, for working capital, to make acquisitions, or strengthen a company's balance sheet. According to Supakorn, private equity investments generate an average 25 per cent return in the US and Singapore on an annual basis.

Last but not least are commodities, which are defined as marketable goods or wares, such as raw or partially processed materials (such as oil, gold, silver and copper), farm products, or jewellery.

Commodities such as gold, oil and copper are good investment alternatives, and here's why:

l The price of oil, the commodity that is traded the most, is linked to the global conditions. Prices have skyrocketed since 2004 because while the global supply is limited, demand has steadily increased. Crude oil futures leaped above US$68 (Bt2,653) a barrel in January at a 20-week high on unrest in Nigeria and an international stand-off over Iran's growing nuclear ambitions.

l Demand for gold has remained high and the reason that gold is recommended is that there is an inverse relationship between the price of the precious metal and the US dollar. Gold has proved a treasure for many countries especially, China and India, which have collected it to beef up their reserves. The gold price jumped 17 per cent last year while the S&P 500 index generated only a 4-per-cent return. Gold prices hit $575.35 per troy ounce in London on February 2 - the highest level since January 1981 - on the back of rising geopolitical concerns, particularly Iran's nuclear activities. The futures quote for April was $565.8 per ounce on the same day.

l The price of silver hit $9.935 per ounce in February 2, the highest since March 1984. The May futures price was quoted at $9.79 per ounce.

l As long as China and India continue growing, the demand for copper won't wane. Wires, cables and electronic devices all around you are made of copper to some degree. Its price has continuously increased. In the first half of 2005, the price hovered around $3,000 per tonne, but late last year, the price broke the $4,000 barrier. Prices hit $5,075 per tonne last month, the highest level since the commodity was first listed in its current format in 1870.

There are other commodities, including, palladium and platinum, livestock and meat, corn and soybeans.

As long as people continue consuming, commodities will remain an interesting choice.

Commodity investments are not available in the Thai market, and the only way that local investors can get into them is by investing in commodity mutual funds.

Many local asset-management companies are planning to launch FIFs that partly invest in commodities. MFC will offer the opened-ended Global Smart Fund this month. The submission period runs from today until March 24.

Piyarat Setthasiriphaiboon

The Nation