Tuesday, August 04, 2020

Mutual fund assets drop more than 10% in 2020

Jul 14. 2020
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By The Nation

Mutual funds saw a sharp drop in total assets in the first half of this year as market volatility caused investors to turn to low-risk assets, said Morningstar Research (Thailand).

Assets under management (AUM) of mutual funds fell to Bt4.8 trillion, down 10.3 per cent from the Bt5.4 trillion at the end of 2019, said Chayanee Juengmanon, Morningstar Research senior research analyst. AUM in first half of 2019 totalled Bt5.3 trillion, she added.

"We expect cash flows into mutual funds to decline in the second half of this year due to high risks and volatility, causing investors to turn to low-risk assets with cash mostly flowing into money market funds," she said.

"Investors are also avoiding mutual funds due to uncertainty following economic impacts and long-term investment conditions."

She advised investors to follow each funds' return because listed companies' performance would drop as the country's gross domestic product (GDP) this year is expected to contract by 8.1 per cent.

Mutual funds' net outflow in the first half of 2020 was Bt350 billion, with net inflow of just Bt40 billion, she said.

"Cash mostly flowed into the money market and equity funds that invest in foreign countries and were able to escape the Covid-19 impact, while Thai equity funds saw limited inflows despite many companies launching Super Savings Funds Extra [SSFX] in June," she said.

"Meanwhile, cash mostly flowed out of fixed income funds, commodity funds, and mixed funds that invest in Thailand and gold."

She said that most mutual funds' delivered positive results in the second quarter of this year.

"Global technology funds generated an average return of 27.9 per cent in the second quarter of this year and 14.9 per cent in the first half because they benefited during the Covid-19 outbreak," she said. "Meanwhile, small and mid-cap equity funds generated an average return of 27.6 per cent in the second quarter of this year, but contracted 8.8 per cent in the first half."

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