Get ready for investment in 2015 by determining risk profile

Global equity funds are still an attractive option for investors who can take higher risk. The US market, backed by a continuous economic expansion, was one of the best performers of 2014, with the S&P500 index rebounding 13 per cent from the beginning of the year, according to Bloomberg. It is estimated that an upside will still prevail next year, creating more investment opportunities. 

The Japanese market is looking forward to a boost in the form of an economic stimulus package from the new government. It is believed this will dispel the economic slowdown in that country, thus propping up the Japanese market in the long term. 

The Chinese market, which is on the rise (especially A-shares), has shown a healthy return of approximately 49 per cent from the beginning of the year, Bloomberg reported last week, and will still be an interesting option, since the valuation is still in the low zone. Coupled with low interest rates, economic-reform attempts and other policies that are expected to come forth, the Chinese market should still grow further and thus should be part of investors’ portfolios. 

The European market is also interesting for its low valuation. However, it is still in need of clearer economic stimulus policies, for that would allow better investment timing. 

The recommended ratio for those who can take higher risk is to invest up to 65 per cent of their portfolio in global equity funds. For moderate risk-takers, up to 40 per cent of their investment should be in such funds, and 20 per cent for those looking for low risk. 

Thai equity funds had been rallying this year before the SET Index plummeted in early December as the global price of crude oil tumbled, to around 1,500 points. However, it is believed that next year’s Thai economic expansion, the government’s infrastructure investment, recovering domestic consumption, and low inflation will boost the Stock Exchange of Thailand back to 1,600 points. Those who can take a high level of risk may opt to diversify up to 25 per cent to Thai equity funds; for moderate and low risk-takers, up to 15 per cent and 10 per cent respectively.  

Interest rates of fixed-income funds throughout the world, and especially the United States, are still in the low zone, with the US Federal Reserve stabilising the Fed funds rate at 0-0.25 per cent and signalling that it can still delay a rate increase. So there will likely be no sign of a higher interest rate in the first half of 2015. 

Apart from this, the market is still showing concerns over the value of the rouble, which has been affected by the declining crude price. 

In line with the global interest-rate trend, the Bank of Thailand’s Monetary Policy Committee agreed to stabilise the rate at 2 per cent, stating that the current monetary policy is relaxed enough for the prevailing economic situation. 

Fixed-income funds are therefore the choice for investors with lower risk-taking ability who aim higher than bank interest rates and for those who are awaiting the right timing to invest. Those who can take higher risk are recommended to diversify around 10 per cent to fixed income funds; medium and low risk-takers, 45 and 70 per cent respectively.  

 

Investments carry risk. Investors should study the prospectus before making a decision.