Kingdom's asset management sector ranked No 3 in world

Thailand follows the United States and South Korea in the “Global Fund Investor Experience” survey by investment-research firm Morningstar. It scores well in terms of regulatory framework and tax structure and improvements in selling activities and intermediary roles. 

However, the country still needs to improve in some areas, particularly information disclosure. 

“The research reflects the continued development in the Thai asset-management industry. There is still much to be done, though,” said SEC secretary-general Vorapol Socatiyanurak.

“Still, the survey was based on information in 2012, and several actions have been launched this year to address the points of concern. Mutual funds are now required to produce fact sheets, containing key information for investors. We are also endorsing the ‘fund supermarket’ to enlarge the sales channel.”

He acknowledged that further development was necessary, as higher standards would enhance asset-management firms’ competitiveness in the international arena. This would then enhance the attractiveness of the Thai market among foreign investors. 

To that end, the SEC is embarking on other measures. It is on course to agree memoranda of understanding with Asean countries to allow small investors to cross-invest in mutual funds set up in the region. The commission is also promoting asset allocation, in response to investors’ risk appetite and expected returns. Investors will also be encouraged to increase long-term investment.

Somjin Sornpaisarn, president of the Association of Investment Management Companies, said the ranking reflected the success in regulatory improvements and professional cooperation between the SEC and fund companies. “We are committed to forge further cooperation with the SEC.”

Morningstar’s survey covers investors in 24 jurisdictions. It ranked Thailand at the “B” level, putting it on par with the Netherlands, Singapore and Taiwan. This is chiefly thanks to such incentives as capital-gains-tax waivers and tax deductions on investment in long-term mutual funds. This raised the scores in the regulatory and tax category above the average level. 

However, some limitations were noted, including those on local funds’ overseas investment and the direct offering of overseas funds to Thai investors.

In the fee and expense category, the scores are higher than the average, as most Thai funds do not levy fees on unit trust transactions.

In the disclosure category, Thailand won a moderate score. Absent from Thai funds’ prospectuses are trading cost, the names of fund managers and their experience, as well as investment data of the funds under the managers’ control.

Thailand scores the least points in the selling and intermediary category, though the 2013 result is better than the previous year. Most funds are now sold via bank branches, limiting access for some investors. Less than 20 per cent of mutual funds are sold through non-bank channels.