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Published on October 29, 2007

It is arguably the busiest time of year for long-term equity funds (LTFs) and retirement mutual funds.

Ayudhya Fund Management says the two months of the year account for as much as 70 per cent of its annual fund sales.

The end-of-year rush for tax-benefit products occurs in spite of managers promoting these products all year.

Ayudhya has been aggressively promoting the products all year round. "We have been marketing our tax-exempt products since March, with promotions that include Bt100 petrol coupons," said the borker's vice president for marketing Narisara Amatayakul.

Narisara believes early-bird investors earn can earn more. She said Bt100,000 invested earlier could have earned Bt20,000.

Aberdeen's LTF and SCB Asset Management's L3 fund have outperformed the Stock Exchange of Thailand main index by as much as 5 per cent to 6 per cent. But risks are high because they invest in high-potential, medium-size companies and those listed on the Market of Alternative Investment.

"We tend to look for stocks with betas lower than the market," said Budsares Yunniyom, senior fund manager for Asset Plus.

Beta is a measure of how volatile and risky investing in an individual stock is compared with the risk of the equity market as a whole.

Taking a comparatively more conservative approach, Asset Plus fund investments are geared towards stocks with low price-to-earnings ratios and high dividends, said Budsares. Returns on stock-market investments enhance the tax benefits of these funds.

With local stocks being swept along in the Asia-wide rally, it is likely they will see double-digit earnings-per-share growth in most blue chips, Budsares said.

The economy has reached the bottom of a trough and can only move up, according to SCB Asset Management.

The company is marketing its funds hard in the hope of getting investors to catch what executive vice president for mutual funds Kampol Adsavakulchai called the January or New Year high. It is offering gifts, including inflatable mattresses.

Fund managers suggest long-term fund investors consider tax benefits first, followed by yield. They must pick funds that also meet their personal risk appetite.

Tax benefits on mutual funds in this country are among the most generous in the world. Mutual funds are exempt from capital gains, dividend and interest income taxes.

Individual investors are subject to 10-per-cent withholding tax and no capital gains tax.

Ki Nan Tsui

 The Nation