Mutual fund investments set for 20% growth
Krungsri Asset Management predicts that in terms of assets under management (AUM), mutual funds will grow by as much as 20 per cent next year domestically, compared with this year's estimate of 24 per cent, amid the delicate recovery of the Thai and globa
But managing director Chatrapee Tantixalerm said that despite the increasing AUM in mutual funds, they still could not be considered a strong investment base in structural terms. More than half of the funds’ value is in low-risk products such as fixed-income instruments and debentures.
Currently in Thailand, total AUM in mutual funds is Bt4 trillion.
He said it appeared that investors were just seeking the higher yields offered by mutual funds than by bank deposits. Some entered mutual funds for their tax benefits. Only a few wished for real benefits from investing in mutual funds.
“Hence the investments circulated in mutual funds are not considered strong enough, and there is a lack of sources of long-term funds,” Chatrapee said.
Prapas Tonpibulsuk, chief investment officer of Krungsri Asset Management, predicted that investment in mutual funds would grow by 10-20 per cent annually over the next five years as savings accounts paid low interest rates, possibly even lower than they are currently. This would prompt savers to seek higher rates of return from other channels.
As for next year, Prapas said, the Stock Exchange of Thailand would continue on a positive trend, with earnings growth forecast at 10 per cent on average. Therefore, the SET Index should record the same growth rate as earnings. Stock picks are still in the construction and property sectors, which are expected to benefit from the government’s investment in infrastructure projects.
Tanitpong Chuenpibal, head of investment risk management at Krungsri Asset Management, conceded that the recovery of the US economy was still fragile. However, he does not believe the United States will suffer another financial crisis.
He said the company had lowered its forecast for Thai economic growth for next year to 4.2 per cent from 6 per cent previously on the weakness of many economic engines such as exports, domestic consumption and government investments.
Krungsri Asset Management still believes that the government’s policy to focus on medium-to-long-term infrastructure projects would help gross domestic product grow by 4-5 per cent annually over the next 10 years. The stock market would be also bullish in the medium and long terms, Tanitpong said.
