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.
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, according to the report.
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.
“Although Thailand’s fund industry size grew in the last quarter, we continued to see investors remain risk averse as there were large net inflows into money market funds,” said Chayanee Juengmanon, Morningstar’s senior manager research analyst based in Bangkok, and author of the report.
Although domestic equity funds had net outflows of THB 2.6bn, their total net asset value increased 16.2% to THB 240bn, in-line with the SET index rise during the second quarter.
Meanwhile, money market funds retained their number spot among Thai investors, attracting net inflows of THB 73.3bn, contributing to THB 177bn of net inflows for the first half of this year. Yet, short-term domestic bonds suffered among the largest reverses and have seen outflows of THB 104bn so far this year.
Foreign investments
Investors also preferred foreign investments to Thai funds, according to 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.
“Foreign investment funds were more attractive to investors in terms of their returns during the quarter, as compared to funds that invest domestically,” said Juengmanon.
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.
Source: Morningstar, 30 June 2020
Thailand feeder funds also received net inflows, attracting THB 22.3bn in the second quarter and a total of THB 17.1bn for the first half of the year, up 1.2% from the end of 2019.
Thanachart’s funds gained the highest net inflow of THB 11bn, with the Thanachart Eastspring Global Technology Fund (which has Polar Capital operating the master fund) especially popular. In contrast, KAsset had the most net outflows (THB 3.7bn), as investors deserted precious metals products.
Among master funds, UBS gained the most net inflows, with THB 8bn shifting to its China and technology products. On the flipside, Pimco suffered the most net outflow in the first half of the year, most of which was from TMBAM funds, but retained its position as the leading master fund firm in Thailand, with a 14% share.
