Thai investors flee foreign bond funds

Data

In 2018, assets in global bond funds plunged while capital poured into global property funds, according to a Morningstar report.

In total, assets in Thailand’s mutual fund industry reached THB 5.1trn ($160bn), which is a 0.8% increase from 2017.

The global bond category had the largest net outflows — THB 98.8bn ($3.1bn), which compares to net inflows of THB 119.5bn in 2017.

On the flipside, global indirect property funds saw the highest net inflows during the year, followed by global and China equity funds.

 

Top and bottom five foreign investment funds by net flows (THB bn)

Source: Morningstar

The report noted that the global indirect property fund category performed the best in Thailand last year, with an average return of 8%. Only nine categories had positive average returns in 2018, with the majority of them being in fixed income and money market funds.

Although global allocation or mixed-asset was the second category to see the most outflows last year, it is now the largest in terms of marketshare within foreign investment funds, replacing global bonds.

Top five foreign investment funds category by AUM (THB bn)

Source: Morningstar

 

Pimco drop

Because of the net outflows in global bond funds, Pimco saw its assets in Thailand drop to around THB 60bn from nearly THB 80bn in the middle of last year.

Pimco offers a global bond fund – the GIS Income Fund – in Thailand via a feeder fund offered by TMB Asset Management. The locally-wrapped version, the Global Income Fund, was one of the top 10 best-selling newly-launched products in Asia-Pacific in 2017. However, it saw the largest outflows of around $1.39bn as of the end of July among the global bond category, according to Morningstar data.

However, the firm continues to be the largest master-feeder fund firm in the country, with the majority of its assets in bond funds, according to the report. The firm is followed by Blackrock, which last year had an increase in assets of 6% to THB 43bn.

Largest master fund firms by broad category (THB bn)

Source: Morningstar

Equity vs fixed income

Equity funds had the highest inflows during the year (THB 216.1bn), while fixed income funds saw net outflows of THB 150.7bn.

Similarly, investors in Hong Kong and Singapore fled from fixed income funds last year, with a preference for balanced or mixed-asset funds, according to a report from Cerulli Associates. But the situation is different in China and Taiwan, where investors had a preference for fixed income products.

All top 10 categories by net inflows in Thailand were equity funds with the exception of foreign investment bond fixed term products, according to the report.

Top 10 categories by net inflows (THB bn)

Source: Morningstar

Looking at the bottom 10 categories for outflows, fixed income funds were the big losers.

Bottom 10 categories by net outflows (THB bn)

Source: Morningstar

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