Expert highlights risk of investing in large-cap Thai equity funds
Investors should be aware of downside risks as the Stock Exchange of Thailand (SET) falls, a leading market analyst has cautioned.
Chayanee Juengmanon, a senior analyst at Morningstar Research, said her firm’s study of large-cap equity funds, which are expected to recover next year, showed they carried a high risk.
"Also, the company compared returns from high-risk and low-risk funds and found that their upside capture ratios were 105.4 and 64.6 respectively, while the downside capture ratios were 98.5 and 79.07," she explained.
"This comparison shows that high-risk equity funds offer the chance of high returns when the market rises, but may drop sharply when the market falls."
She noted that the five equity funds with the highest returns in the previous three years as of September 25 were all in negative territory: Asset Plus Equity RMF Fund (ASP-ERF) at -1.54 per cent and -1.99 per cent, LH Strategy Equity Fund-Accumulation (LHSTRATEGY-A) at -12.13 per cent and -2.39 per cent, LH Strategy Equity Fund-Auto Redemption (LHSTRATEGY-R) at -12.12 per cent and -2.4 per cent, LH Strategy Equity Fund-Dividend (LHSTRATEGY-D) at -12.12 per cent and -2.41 per cent, and Asset Plus High Growth LTF Tax Benefit (ASP-GLTF-T) at -4.25 per cent and -3.03 per cent.
"The ASP-ERF fund has a policy to make long-term investment in stocks with good fundamentals focusing on market conditions," she said.
She added that the top five stocks held by ASP-ERF as of August 31 were Sri Trang Gloves (Thailand) (STGT) at 8.31 per cent, Airports of Thailand (AOT) at 5.19 per cent, Minor International (MINT) at 5.19 per cent, PTT at 4.49 per cent and JMT Network Services at 4.1 per cent.
