Life target plan offers something different

BT Asset Management is applying the provident-fund model to its new mutual fund to be launched later this year or early next.

The BT Life Target Plan will appeal to the office-worker crowd, who feel that their provident funds are not enough, Jerdphan Nithyayon, executive vice president for investment, said yesterday.

It is a move away from competing in products in the market that are more or less the same, managing director Anusorn Buranakanonda said.

BTAM is trying to stand apart from other asset-management companies by offering investment solutions. As a small player, it needs to find niches, he said.

Funds like the BT Life Target Plan, recently approved by the Securities and Exchange Commission, are common in more mature capital markets, he said. The US, for instance, has college funds.

So if long-term equity funds and retirement mutual funds are a long, drawn-out war, this "savings plan" fund is a brief skirmish.

It might be apt for couples who plan to get married in a fixed time frame, and the future investment returns would serve as a kind of start-up capital, he said.

Jerdphan said the three-year fund required a minimum initial investment of Bt50,000 and afterwards the investor pays about 10 per cent of the seed money or Bt5,000 each month for three years. That means if an investor paid Bt100,000, they would have to pay Bt10,000 monthly instalments.

The fund pinpoints one of the main problems among Thais - a lack of discipline in savings - Anusorn said. And one of the main concerns for these employees is security. The fund is the first to come with insurance, he said.

In an accident, say, just a year into the investment, the insurance company would help the deceased pay the remaining instalments. In the case of Bt10,000 a month, that would be Bt240,000 without the remaining returns.

Returns-wise, the fund will take a decidedly different tack from its doppelganger, the provident fund. "There will be no more provident fund committee holding us back from investing in riskier assets," Jerdphan said.

BTAM's Life Target Fund will have a decidedly more liberal appetite for equity and will even invest in property and property funds, he added.

Asset classes will be more diverse. For instance, a portfolio with less than half in Thai bonds, 20 per cent in foreign treasury bills and the remainder in equity might yield about 9 per cent.