Posted inSoutheast Asia

Thailand’s Krungsri launches dividend fund

Thailand’s Krungsri Asset Management has launched a dividend-paying equity fund in light of the expected rise of the Thai stock market.

“The Thai economy is enjoying steady growth and greater strength and is benefiting from a large amount of money from the investment in infrastructure and spending by the public sector,” Siriporn Sinacharoen, the firm’s managing director, said in a statement.

Thailand rose to be the best performing stock market in the region last year, increasing by nearly 20%, from being one of the worst in 2015 (-14%), according to SFC’s review of global markets. Although the market may seem volatile, its volatility for those two periods is 12.52, which is lower than MSCI Asia Pacific’s 16.06, according to FE data.

The Thai stock market is also cheaper when compared to its Southeast Asian peers, according to Sinacharoen. Its price-earnings ratio is 15.3, which is lower than the Indonesia market (16.4) and the Philippines (17.3). She also expects that the average dividend payout will be larger in Thailand than in those markets.

For the past five years, Thailand has had a higher average dividend payout compared to its peers, with the exception of 2016, when Indonesia paid out the most, according to a Henderson dividend study. 


Annual dividends

























Source: Henderson Global Investors 


The launch of the fund comes at a time when the firm is seeing growing demand for dividend equity funds from investors, given the returns they provide, Chatkaew Groatong, the firm’s Bangkok-based vice president for alternative investments, told FSA.

She acknowledged, however, that fixed income is still a choice for investors who are searching for yield. “But they still look for new fixed income alternatives with flexibility in terms of duration to provide them with higher expected returns than conventional funds.”

Thailand saw inflows of $232m into equity funds for the full year 2016, according to Morningstar data, as reported. But fixed income funds were significantly more popular, seeing inflows of $21.9bn.

Blend model strategy

Excluding the new fund, Krungsri has 10 equity funds, four of them dividend paying vehicles, according to information on the company’s website. 

One of those four dividend funds, the Krungsri Dividend Stock Fund, is the largest of all the 10 equity funds, having assets of around THB18.55bn ($524m).

Sinacharoen said in the statement that the new dividend fund is different from the other equity funds as it uses a “blend model strategy”, which involves selecting “star stocks” from all groups of stocks of any size and type.

“The investment can be made in dividend stocks, high-growth stocks and mid-small cap stocks,” she said, adding that each type of stock generated a different rate of return for each year.

 Source: Krungsri Asset Management

Technology foreign investment fund

The firm’s new dividend fund is the second product that Krungsri launched this year. Last month the firm rolled out its Global Technology Equity Fund, which is invested through the T Rowe Price Funds SICAV – Global Technology Equity Fund.

Funds that invest in foreign securities have been popular in Thailand over the last few years, although the demand shifted toward fixed income in 2016, Rui Ming Tay, Singapore-based analyst at research firm Cerulli Associates, told FSA in a previous interview.

In Thailand, foreign funds for sale have been required to come in through a master feeder scheme. However, relaxed regulations in January last year allows qualified Thai investors to buy offshore funds directly from a broker or bank, avoiding the master feeder scheme, as reported.

However, the take-up for those offshore funds could be slow as they have to compete with the locally-wrapped funds that are already available in Thailand, said Kittikun Tanaratpattanakit, senior research analyst at Morningstar Thailand, said in a previous FSA interview. He added that there were around 360 wrapped foreign investment funds available for sale in Thailand in 2016.

Krungsri sees the development as an opportunity for high-net-worth and accredited investors to have a wider choice of investments, according to Groatong.

“However, this tool contains foreign exchange risks, so investors must have a good understanding on them,” she said.

Krungsri manages around 40 of those wrapped foreign investment funds, according to information on its website. It is the fifth largest fund manager in Thailand in terms of AUM as of end-September last year, according to a report from Cerulli Associates. 

Top 10 Thai mutual funds by AUM as of end-September 2016

Fund manager AUM
Kasikorn Asset Management $25.9bn
SCB Asset Management $19.8bn
BBL Asset Management $11.3bn
TMB Asset Management $7.5bn
Krungsri Asset Management $7.4bn
Krung Thai Asset Management $7.3bn
Thanachart Fund Management $4.1bn
UOB Asset Management (Thailand) $4.1bn
CIMB-Principal Asset Management $1.7bn
MFC Asset Management $1.2bn
Source: Cerulli Associates; Note: data excludes fund-of-funds

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