Morningstar pulls trigger on funds amid 'impressive' growth

Sixty eight new trigger funds were launched in the first six months of the year. However, in terms of value, they trailed behind foreign investment funds (FIFs) which attracted over Bt70 billion in the period.

FIFs made up almost 60 per cent of Thailand’s market share, with total net assets worth Bt302.11 billion as of June, as investor confidence in equity markets increased since the 2008 crisis. But confidence in equities, especially in China’s shares, recently dropped along with returns when the bubble burst in China’s capital markets.
Inflow to FIFs focusing on equity was over Bt70 billion in the first half. Yet, funds investing in money market, global high yield bonds and short-term bonds remained the most popular, with net inflows of Bt127.818 billion, Bt98.184 and Bt78.677 billion, respectively.
Among foreign equity investment funds, those investing in Japan continued their strong performance to top the chart with 16.5 per cent in the first six months but that figure dropped to 13.7 per cent as of July 8 while the average return of China equity funds dropped from 14 per cent at the end of June to 0.9 per cent last Wednesday.
The average returns for German and the US equity funds dropped from 11 and 1.6 per cents to 8 and 1.4 per cents, respectively, in the same period of time.
“The most impressive growth so far this year is foreign equity investment funds,” said Kittikun Tanaratpattanakit, senior data analyst at Morningstar. He also witnessed the sharpest growth in the size of trigger funds investing in IPO stocks.
Most of the trigger funds were invested in Japan (24.95 per cent), Thailand (24.04 per cent), China (22.59 per cent), Asia Pacific (11.21 per cent) and Germany (7.6 per cent) to seek around 5-8 per cent returns on average.  In terms of asset category, foreign equity, local equity and oil were the top three (with assets valued at Bt21 billion, Bt6.5 billion and Bt2.5 billion, respectively.
Twenty of the 68 trigger funds that were launched were able to close so far. Among them, five oil trigger funds were launched and closed before June 30.
Kittikun said the average return from Thai equity funds investing in large-capitalisation stocks in the first six months of 2015 was 1.1 per cent while that of mid-to-small-cap equity funds was at 3.38 per cent.
The best performer in large-cap equity funds was in the energy sector while the worst performing were those exposed to the banking sector with returns contracting by 15 per cent in the same period.
Inflows to the Thai large-cap equity funds contracted by Bt3.289 billion in the first half, compared to the same period last year. Meanwhile, inflows to mid-to-small-cap equity funds dropped by Bt5.576 billion. Thai equity funds had a net outflow, worth Bt72 million, for the first time in the last 13 quarters with total assets worth Bt178.6 billion at the end of June.
Meanwhile, investors in long-term mutual funds returned and started to invest in the second quarter; however, the total net assets of this segment dropped to Bt264.749 billion, which represents a contraction of 2.31 per cent since the end of 2014.
Retirement mutual funds have shown a slight growth so far this year by bringing the total net assets to Bt171.138 billion, which represents an expansion of 2.66 per cent in the same period.

At the end of June, the size of Thailand's mutual fund industry swelled by 6.03 per cent from the end of 2014 to over Bt4 trillion.