Number of equity funds to continue expanding in 2015, SET says

The SET and the Association of Investment Management Companies (AIMC) yesterday launched a fair that will run until Sunday to promote tax-incentive funds, consisting of long-term equity funds (LTFs) and retirement mutual funds (RMFs). They expect this year’s event to pull together more than the Bt400 million worth of the two types of funds that asset-management companies managed to sell at the same event last year.

SET president Kesara Manchusree said all types of equity funds had gained popularity among investors in the past few years because of the good returns from LTFs. Government policy has also made these funds almost irresistible to investors.

LTFs have averaged around 25.87 per cent return on investment per annum in the past five years.

She said the SET wanted to increase the proportion of institutional investors in the capital market, both domestic and foreign, to provide more stability. Institutional investors normally have larger portfolios and fluctuate less in their decision-making. The aim is to get their proportion up from the current 40 per cent to 50 per cent in the next five years.

AIMC chairwoman Worawan Tharapoom said that as of last Friday, the fund industry had Bt3.79 trillion in net assets under management, up 23.23 per cent from the end of last year. The industry has 1,572 funds in total, including 131 RMFs worth Bt159.87 billion and 53 LTFs worth Bt256.49 billion.

The number of unit holders has increased continuously, rising 6.02 per cent from 3.81 million accounts at the end of 2013 to 4.04 million accounts as of November, she said.

Meanwhile, Kesara said the external effects on the stock market, including negatives such as falling global oil prices and positives such as the expected delayed increases in global interest rates, meant investors needed to do more homework before making decisions. They should also try to spread their risks by increasing their investment in long-term mutual funds.

"Warren Buffett looks for long-term investment and he does not look for short-term returns," she said, referring to the American business magnate known as the most successful investor of the 20th century.

Korawut Leenabanchong, chief executive officer of Aberdeen Asset Management, said the valuation of Thai stocks was not cheap with a price-to-earnings ratio of 12 times and Investors should be selective.

Negative factors on the stock market next year are the instability of oil prices, which are currently in search of equilibrium, the shaky recovery of the euro zone, and uncertainty over China’s growth.

Positive factors are Thailand’s fundamentals, such as the expectation that the economy will do better next year from low interest rates and the anticipated increase of government investments, Korawut said.