KAsset expecting good returns from bourse

Kaset Chaiwanpen, head of the company's Institutional Clients Department, explained: "The Stock Exchange of Thailand [SET] Index surged 26 per cent last year, while our stocks [in the company's provident funds portfolio] offered a 40-per-cent return. That's why the average return from our balanced funds was 10 per cent."

As of the end of February, KAsset was the country's fourth-largest provident-fund-management company, with assets under management of Bt49.89 billion, up from Bt47.93 billion at the end of last year.

Eighty per cent of the firm's assets at the end of last year were in balanced funds, with the rest in fixed-income funds. Equity accounts for 17-18 per cent of KAsset's balanced funds, with debt instruments making up the rest.

"We still see investment opportunities in the Thai stock market and that's why we do not change our equity holding ratio," Kaset said.

KAsset believes the SET Index will likely reach 960 or even 1,000 points this year.

Energy stocks dominate the equity portfolio of KAsset's provident funds, followed by banking, property and communication stocks.

"Outperformed returns from our stock-market investments last year can be ascribed to piling up petrochemical and energy stocks. However, we've reduced our investment weighting in petrochemical stocks this year," Kaset said.

Regarding debt instruments, KAsset invests in bonds of investment grade only, and most of them have a credit rating of "A" or higher.

At the end of last year, KAsset had four pooled funds with asset size of Bt14 billion, or 30 per cent of the company's provident-fund assets.

The first category of pooled funds is conservative fixed-income funds investing in deposits and government bonds with a tenor of less than one year.

The second category is pure fixed-income funds putting money into deposits and government and corporate bonds.

The third is made up of balanced funds investing 75 per cent of assets in debt instruments and 25 per cent in equity. And the fourth consists of balanced foreign-investment funds (FIFs) investing 75 per cent in debt instruments, 20 per cent in stocks and 5 per cent in FIFs.

KAsset's single funds had assets of Bt34 billion at the end of last year, or 70 per cent of the company's provident-fund assets. Eighty per cent of these were balanced funds and the rest fixed-income funds.

Kaset believes returns from KAsset's balanced and fixed-income funds this year will be 5-6 per cent and 3-4 per cent, respectively.

"The interest-rate trend this year will be stable in the first half, and it may go either up or down about 25 basis points in the second half, so we expect returns from debt-instrument investment this year to either be flat or decline a little bit," he said.

KAsset provides an employee's-choice service, and the funds of about 100 employers have opted to use it. Employee's choice is a type of provident fund that allows members the opportunity to choose an investment policy that best suits their own risk and return expectations.

"Those who use the employee's-choice type can choose to invest in the four categories of our pooled funds," Kaset said.

Price-cutting competition in the industry will remain tough, even though the industry has room to grow, he said.

"We'd like customers to pick provident-fund management firms according to performance and services rather than pricing. No traders offer quality products at cheap prices," he said, adding that the government should implement a mandatory provident-fund scheme providing good retirement benefits.