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Published on September 27, 2007

Following just two months after Thanachart's Bt2-billion T-Premium brand FIF, the MFC I-Chic Fund will invest at least 80 per cent of its Bt800 million in shares of the Dominion Chic Fund.

The Swiss-based I-Chic fund is managed by BlackRock, which merged with Merrill Lynch Investment Managers last September.

The feeder fund will invest in 50 world-class brands with strong upside, said MFC executive vice president Supakorn Soontornkit. These brands span industries from alcoholic beverages to automobiles, with powerhouses like Diageo and BMW.

Merrill Lynch's Lifestyle Index, which tracks global luxury brands, reports that brand names like Bulgari and Christian Dior grew 28-40 per cent over the past year - much faster than any global stock index.

But 18 per cent of the fund's capital is weighted in the technology sector, with companies like Apple, Sony and Research in Motion.

Research in Motion, the maker of Blackberry, has grown 182 per cent from last year, with a 150-per-cent upside potential. Its earnings-per-share ratio also looks rosy at 40.

Innovation is an important factor in selection, Supakorn said.

Since the Swiss fund has just been set up, it is too early to pinpoint returns. But the average growth for these brands was about 40 per cent over the past three to five years.

But growth would not be lower than 10 per cent, using the MSCI Index as a benchmark, hovering at about 20 per cent, he added.

MFC president Pichit Akrathit said although exposed to economic turbulence the same as any other fund, MFC I-Chic targeted the burgeoning legions of new middle class and multimillionaires in emerging markets like India and China.

Senior executive vice president Kanchana Rojvatunyu said this new buying power corresponded to three new trends in the region. They are people trading themselves up and acquiring more luxury goods, because they have more disposable income; older folk who want to look youthful; and couples limiting themselves to only one child, leaving more money to spend on themselves.

Pichit said the FIF was MFC's third fund in euros, which would diversify foreign-exchange risks away from the weakening US dollar.

Ki Nan Tsui

 The Nation