Thai Mutual Funds Part 2
26 June 2012
Hi All, following on from my previous blog on Mutual Funds (Part 1), it gives me great pleasure in presenting to you Part 2: Thai Mutual Funds.
Q: When did it all start for Thailand?
A: The Thai Mutual Fund industry began life in 1975 through a joint venture with the Thai government and the International Finance Corporation (IFC). 2 years later in 1977 the first Mutual Fund was offered.
Q: What kind of Mutual Funds has Thailand got to offer?
A: There are typically four types: fixed income, equity, mixed and property funds. The fixed income and equity based funds dominate the Thai asset management industry.
Q: Thats interesting, but why are the equity funds so popular?
A: There are really two categories you can place equity funds under.
No tax benefit:
Equity Index Fund // General Stock // Partial Foreign Equity Fund // Equity Foreign Investment Fund // Equity Feeder Fund and Exchange Traded Funds.
Second category – Tax Benefit:
Long Term Funds (LTF) and Retirement Mutual Funds (RTF). According to the Thailand’s tax department, each individual is allowed to deduct taxable income up to 15% off total taxable income.
Q: And why are LTF’s and RMF’s subject to tax relief then?
A: The Thai government wants to promote longer term investments. So LTF’s and RMF’s have to be held for a minimun of 5 years.
Q: Anything to watch out for?
A: Yes, Trigger funds have increasingly gained interest among investors since their returns beat inflation at a time when interest-rate risk is still high.
Basically, a trigger fund will automatically redeem and/or switch the units on behalf of the investors when it meets one or more predetermined criteria, usually a rate of return. The main benefit of this type of fund is to ensure investment discipline at a time of high volatility.
Hopefully thats given you at least some insight into the Thai Mutual Funds Industry, if not feel free to contact me directly as below. And finally I have to protect my derrière with a disclaimer:
Neither the information nor the opinions herein constitute, or are they to be construed as, an offer or a solicitation of an offer to buy or sell investments. You should study any investment fund’s prospectus and consult a qualified tax professional for tax-related advice prior to making a decision to invest.