The total net outflows in 2020 amounted to THB 276.3bn ($9.22bn), declining 7.3% from 2019, as investors deserted fixed income and (balanced) allocation funds during most of the year.
Overseas bond products, represented by the “foreign investment bond fixed term” category, were the least popular, suffering net outflows of THB 218.1bn, Morningstar Direct data shows.
“The net asset value (NAV) of the majority of domestic investment categories also contracted throughout the year,” said Chayanee Juengmanon, senior research analyst at Morningstar Research (Thailand).
Thailand equity (excluding LTF, RMF, and SSF) assets dropped by 22.3% to THB 227.9bn compared with 2019. Although the last three months of 2020 saw a 9% increase in NAV, there were net outflows of THB 9.8bn from Thai equity funds during the quarter.
“This implies that the increase in asset size from the previous quarter was mostly due to performance returns,” said Juengmanon.
Domestic equity large cap funds in particular lost ground, with THB 7.2bn net outflows in the fourth quarter 2020, with total net assets of THB 621bn at end of 2020, down 15.4% from the close of 2019. Total net outflow for 2020 was THB 21bn which was the first annual outflow in 15 years, according to Morningstar Direct.
However, allocation funds (that is, mixed assets) were the domestic category with the largest net outflow in the fourth quarter, suffering net redemptions of THB 18.5bn, most of which came from the Aggressive Allocation sub-sectors, with THB 9.2bn of withdrawals.
In contrast, the year’s winners were money market funds and China equity products, which garnered net inflows of THB 164.4bn and THB 59.6bn, respectively.
Thailand Fund Industry – Net Flow 2020 (billion baht)
| Top 5 | Bottom 5 | ||
| Money market | 164.4 | Foreign investment bond fixed term | -218.1 |
| China equity | 59.6 | Flexible bond | -177.6 |
| Global equity | 50.1 | Short-term bond | -45.5 |
| Global bond | 21.7 | Aggressive allocation | -43.1 |
| Mid/long-term bond | 14.9 | Bond fix term | -25.6 |
BOUNCING BACK
Although it was a gloomy year for the fund industry overall, precipitated by outflows in the first quarter of the year as investors feared the economic impact of the coronavirus pandemic, the final quarter indicated confidence is returning.
Net inflows for the fourth quarter of 2020 were THB 77.8bn, an increase of 5.8% from the third quarter, bringing total net assets in the Thai fund industry (excluding close-end, Reits, infrastructure funds and ETFs) to THB 4trn.
“Investors returned to higher risk assets by moving out of money market funds [from which there were outflows of THB 9.2bn],” said Juengmanon.
In general, the final three months of 2020, was “another quarter with foreign investment opportunities gaining more attention than domestic investment themes,” she said.
China and global equity products — especially those managed by foreign firm — had already attracted inflows from the mid-point of 2020, and they were among the most popular categories in the final quarter, enjoying inflows of THB 23.4bn and THB 18.9bn, respectively.
Indeed, China equity net assets reached THB 119.2bn, up 185.1% from the previous year, which brought the category into the top 10 ranking for the first time, said Juengmanon.
Bond products also returned to popularity as investors sought income in a low interest rate environment.
In fact, fixed income funds had the largest net inflows (THB 56.7bn) in the final quarter of 2020, ahead of equity funds (THB 37.7bn).
Thailand Fund Industry – Net Flow Q4 2020 (billion baht)
| Top 5 | Bottom 5 | ||
| Short-term bond | 54.6 | Foreign investment bond fixed term | -22.1 |
| China equity | 23.4 | Aggressive allocation | -9.2 |
| Mid/long-term bond | 21.5 | Money market | -9.2 |
| Global equity | 18.9 | Equity – large cap | -7.2 |
| Foreign investment | 9.8 | Property – indirect | -6.1 |
