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AIA sets up AM unit in Thailand

AIA Investment Management Thailand's first funds will include foreign and domestic investment funds.

AIA Thailand, the country’s largest life assurance company, has injected THB 847bn ($27.2bn) of assets into its newly formed investment management subsidiary, according to a statement released by the firm this week.

The announcement follows after AIA Investment Management Thailand (AIAIMT) received licences for private fund management and mutual fund management from Thailand’s Securities and Exchange Commission, according to records from the regulator.

AIAIMT’s first funds will comprise five domestic products and four foreign investment funds (FIFs), according to the statement. Sukkawat Prasurtying, chief executive of AIAIMT, expects that the funds will raise THB 5-6bn from its parent’s 200,000 unit-linked insurance customers.

The funds will focus on long-term gains, covering any industry with consistent growth, and will have various risk profiles to match different needs and risk appetites, he said. There are also plans to launch four more FIFs at the start of next year and a further three later, he added.

The assets of AIAIMT, which was incorporated in June 2019, are made up of government bonds worth THB 510bn, corporate bonds (THB 100bn), offshore debentures (THB 130bn) and equity and other investments worth about THB 100bn transferred from AIA.

Last year, AIA Thailand held THB 23bn in AUM for unit-linked portfolios, according to the company’s website.

Based in Hong Kong, AIA has a presence in 18 markets in Asia-Pacific, including Singapore, Malaysia, China, Korea, the Philippines, Australia, Indonesia, Taiwan, and Vietnam. In 2018, the firm’s asset management unit received relevant licences in Hong Kong and is expected to launch its first batch of SFC-approved mutual funds this year.

Competitive funds market

Other asset management companies in Thailand controlled by foreign insurers include Manulife Asset Management and TMBAM Eastspring.

Net assets of the country’s mutual funds totaled THB 4.8trn ($152bn) at the end of June, surging 6.3% in the second quarter compared with the first three months of the year, according to a recent Morningstar report.

The popularity of money market funds and the recovery in domestic and global equity markets were the main reasons for the increase, but they were insufficient to recoup this year’s full decline, with net assets being 10.3% lower than at the end of 2019, with net inflows for the second quarter amounted to THB 40.1bn, but net outflows for the second half of this year remain high at THB 350bn.

Investors also preferred foreign investments to Thai funds, said Chayanee Juengmanon, Morningstar’s senior manager research analyst based in Bangkok, and author of the report.

The net asset value of foreign investment funds (FIF), excluding fixed term products, increased 13.6% from the previous quarter to THB 627bn, with all of the five largest FIF categories enjoying positive net asset growth.

Global bond funds had the biggest net inflow, with THB 9.6bn, but global equity products had the greatest net asset growth of 40.5%, driven mostly by strong market returns.

Technology funds have been especially popular, attracting 6-month net inflows of THB 6.9bn between 1 January and 30 June, because of the sector’s relative immunity to the economic fallout from the Covid-19 pandemic, according to Juengmanon.

Part of the Mark Allen Group.