Funds face crunch
Mutual funds next year will be squeezed by banks, which will be chasing aggressively after savings with a wide-ranging arsenal of financial products.
Worawan Tharapoom, president of the Association of Investment Management Companies, said yesterday that the outlook for the asset-management industry was tougher than this year.
Banks need to mobilise deposits to finance the economic expansion next year, which is expected to be boosted by a slew of infrastructure mega-projects.
Mutual funds are not expected to grow, so asset-management companies will have to adjust their strategy.
Over the past few years, total assets under management (AUM) experienced unusual growth due to the excess liquidity in the system. One reason was that banks have not lent money.
However, the Thai economy, which is expected to recover next year, increase banks’ need for deposits to back loan expansion.
AUM this year is expected to remain at Bt2 trillion, the level of last year.
Investors have switched to debentures to earn higher returns than bank deposits, which offer high rates.
The weakening economy of the United States and the debt crisis in the European Union remain risk factors for investment in those funds having a policy to invest in foreign financial instruments.
