Thailand’s mutual fund industry had huge redemptions this year, with net outflows of THB 206.04bn ($6.26bn) during the first quarter, according to data from Morningstar Direct.
By asset class, fixed income funds accounted for the bulk of the outflows at THB 273bn.
An Eastspring spokeswoman said recently that the global spread of Covid-19 has created panic selling, with many investors in Thailand swarming into cash, resulting in “an unprecedented level of redemptions”. As a result of those redemptions, the firm had to liquidate four of its TMB Eastspring fixed income products.
On the flipside, money market funds were the only asset class that had net inflows during the period as investor jumped into cash-like investments.
Overall, Thailand’s fund industry AUM was down 16% to THB 3.56trn in March from THB 4.13trn during the same month last year.
| Broad category group |
1Q fund flows (THB bn) |
| Allocation (mixed asset) |
(13.1) |
| Commodities |
(1.3) |
| Equity |
(23.89) |
| Fixed income |
(272.79) |
| Money market |
104.5 |
Source: Morningstar Direct
Sentiment turnaround
Of the 10 sub-asset categories that had the largest redemptions during the first quarter, four of them are fixed income. Short-term bond, foreign investment bond fixed-term and mid/long-term bond funds had the highest net outflows during the period.
In Thailand, short-term fixed income products invest in bonds with duration of one-to-two years, while mid/long-term fixed income funds have duration of more than two years.
The data also shows a complete turnaround of sentiment from 2019, as six out of the 10 sub-asset categories that had the highest outflows this year were among the most popular categories last year (see below).
Bottom 10 sub-asset classes with the highest outflows
| Name |
1Q fund flows (THB bn) |
| Short Term Bond* |
(148.83) |
| Foreign Investment Bond Fix Term* |
(92.81) |
| Mid/Long Term Bond* |
(52.38) |
| Aggressive Allocation* |
(19.89) |
| Property – Indirect Global* |
(12.09) |
| Conservative Allocation |
(7.59) |
| Equity Large-Cap* |
(5.57) |
| Bond Fix Term |
(4.83) |
| Emerging Market Equity |
(3.18) |
| Global Equity |
(2.86) |
Source: Morningstar Direct. *categories that had the highest net inflows in 2019
On the fund level, The TMB Eastspring Ultra-Short Bond Fund and the TMB Eastspring Aggregate Bond Fund, which were two of the four funds liquidated by Eastspring, had the highest net outflows among all funds sold in Thailand.
The Ultra-Short Bond Fund had net outflows of THB 78.24bn, while the Aggregate Bond Fund had net redemptions of THB 62bn. Both funds are invested in investment grade foreign debt.
The next biggest outflows are from the short-term bond fund Thanachart Income Plus (-THB 12.74bn) and the mixed asset SCB Income Plus Fund (-THB 10bn).
Most popular categories
Despite the broad redemptions from fixed income and equity funds, 13 sub-asset fund categories had net inflows during the first quarter.
While equity products are generally more volatile than fixed income funds, a few sub-asset equity categories had net inflows. They include global technology, China and US equity funds.
Sub-asset classes with net inflows during the first quarter
| Name |
1Q fund flows (THB m) |
| Global High Yield Bond Fix Term |
22,718 |
| Moderate Allocation |
12,989 |
| Global Technology |
4,440 |
|
China Equity |
4,154 |
| Emerging Market Bond |
1,935 |
| Foreign Investment Miscellaneous |
1,628 |
| Global Bond |
1,447 |
| Global Allocation |
1,385 |
| Commodities Energy |
1,336 |
| US Equity |
1,080 |
| Property Indirect |
894 |
| High Yield Bond Fix Term |
709 |
| Global Infrastructure |
466 |
Source: Morningstar Direct
The inflows in global technology funds were driven by one product – the Thanachart Eastspring Global Technology Fund, which had net inflows of THB 5.26bn, according to data from Morningstar Direct. The fund, which is the white-labelled version of the Polar Capital Global Technology Fund, is relatively new and was launched in January.
Meanwhile, at least three funds drove the net inflows within the China equity category. They are the Krungsri China A Shares Equity Fund (THB 1.5bn in net inflows), the TMB Eastspring China A Active Fund (THB 1.38bn) and the SCB China A-Shares Fund (THB 1.17bn).
The three are feeder funds. The Krungsri and TMB Eastspring products both invest in the same fund — the UBS (Lux) IS – China A Opportunity Fund.
The SCB product invests in the ChinaAMC CSI 300 Index ETF, which is listed in Hong Kong, according to their fund factsheets.
In the US equity category, one product drove inflows: the Kasikorn Asset Management’s K US Equity NDQ 100 Index Fund.
The product, which had net inflows of THB 1.1bn, is a white-labelled version of the Invesco QQQ Trust, which is US-listed ETF that tracks the performance of the Nasdaq 100 Index.
