As stock market dips, money pours into tax-saving funds
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About Bt10.4 billion of capital was expected to have poured into tax-saving funds last quarter, particularly equity funds, on better understanding by investors, according to Morningstar Research (Thailand).
Kittikun Tanaratpattanakit, an analyst at the company, said yesterday that of the Bt10.4-billion total, Bt5.59 billion was expected to move into long-term equity funds (LTFs) and Bt4.83 billion into retirement mutual funds (RMFs).
Most such capital moved particularly into equity funds last quarter when the Stock Exchange of Thailand plummeted. Investors saw the sharp drop as an investment opportunity.
“Second-quarter capital inflows into tax-saving funds made record highs for both types of funds since their establishment. About Bt4.53 billion of capital moved into LTFs invested 100 per cent in equities and Bt1.5 billion into LTFs invested 70:30,” he said. About Bt437.83 million moved out of LTFs with derivatives.
About Bt5.38 billion poured into RMFs focused on equities and Bt340.31 million into RMFs with mixed investment. About Bt664.39 million moved out of RMFs focused on bonds.
“Based on previous-year statistics, we expect a large amount of capital to wait for opportunities to buy [funds] in the latter half of this year,” he said.
The second-quarter average return on tax-saving funds would decline by half from the end of the first quarter, he said.
Both LTFs’ and RMFs’ returns averaged 8.49 per cent for large stocks and 8.29 per cent for medium and small stocks. Global funds provided average returns of 6.64 per cent.
Asia-Pacific excluding Japan funds posted a negative return of 8.83 per cent, while emerging-market equity funds gave a negative return of 4.47 per cent.
Given concerns over the US monetary stimulus’ tapering, global bond and emerging-market bond funds registered negative returns of 1.61 per cent and 4.98 per cent, while domestic bond funds yielded 1 per cent.
“Gold funds suffered the most with a negative return of 26.48 per cent after the global gold price plummeted from US$1,700 an ounce to below $1,300 an ounce now,” he said.
In the first half, about Bt2.7 billion was expected to flow out of tax-saving funds.
In the corresponding period, about Bt8.22 billion was expected to flow out of LTFs, while about Bt5.49 billion was estimated to pour into RMFs.
