INVESTMENT / ADVICE : LTFs and FIFs stable when market suffers

INVESTMENT / ADVICE : LTFs and FIFs stable when market suffers.

NUNTAWUN POLKUAMDEE

Investors are being advised to consider long-term equity funds and foreign investment funds (LTFs and FIFs) as two options offering sound returns and modest risk in light of the volatile equities market, according to fund managers.

LTFs offer tax incentives on contributions as well as the opportunity to pick up relatively undervalued stocks for long-term gains.

Foreign investment funds can help investors diversify their portfolios, minimise country risk and take advantage of booming financial markets outside of Thailand.

Voravan Tarapoom, the managing director at BBL Asset Management, said that at a time when the Thai market is decidedly pointed downward, long-term investment options such as LTFs, retirement mutual funds and FIFs offered multiple advantages.

She said that BBLAM, a unit of Bangkok Bank, had been relatively unaffected by fund redemptions over the past several weeks.

The Stock Exchange of Thailand has fallen nearly 14% over the past month, the result of the market shock over the Dec 18, 2006 capital controls imposed by the Bank of Thailand, the New Year's Eve bombings in Bangkok, and continuing uncertainties over recently announced reforms of the Foreign Business Act.

"We are lucky that most of our clients are Thais, so they were not affected by the 30% deposit rule on foreign inflows. But the impact of the measure has affected the entire market, so everyone is suffering," Mrs Voravan said.

Political uncertainties, violence in the southern provinces and lingering questions about the central bank's monetary policies remain risk factors for the near future.

Mrs Voravan said that while FIFs were a sound option for investors in light of short-term risks, the Thai market offered the potential for healthy gains given that local stocks now carried valuations that were the cheapest in Asia.

Other fund managers have also been restructuring their offerings to focus on low-risk strategies.

ING Mutual Fund on Friday introduced a short-term fixed-income fund to help attract investors seeking to avoid the equities market. The company, however, will delay its plans to launch two or three property funds this year due to the 30% reserve rule, which also affects foreign investments in local funds.

PrimaVest Asset Management also plans to launch new short-term fixed-income funds with time periods of three and six months.

Tisco Asset Management, meanwhile, is advising its investors to focus on LTFs or equity funds to take advantage of cheap valuations.

At BOA Asset Management, advisers are promoting its capital-guarantee FIF fund, offering investors the chance to invest in foreign securities with limited downside.

Bangkok Post
Monday January 15, 2007