Mutual Fund Investments

[kyb789]

I have read many posts on the subject and still very confused. Thailand investments are done differently than the U.S. and I need help with some basics. First, it appears one can go to their Thai bank and the bank has people that do this sort of stuff. Correct? Here is my situation:

I don't want an RMF (Retirement Mutual Fund) or LTF (Long Term Fund). These are funds that have a 500k max investement per year tax free for retirement purposes. I have this already through my Thailand employment and please don't talk to me more about the benefits, I am already maxed out on contributions. Everytime I go to a bank, they start talking about one of these!

I DO want to get a mutual fund that I can buy and sell as I please, transfer money around, etc. Yes, I will pay the tax on earnings. Do the banks also handle this type? What should I do to get set up? Are the funds managed by the banks (K-bank, SCB, Krunsri, etc) or do they have a separate fund manager you must be in contact with?

Thanks in advance!

[chiangmaibruce]

Yes some Thai banks have fund management arms, just as some have stock-broking arms ... a wide range of funds can be accessed this way.

But you can just as easily go to a specialist stand-alone fund manager. Just googling on "thailand mutual funds" will probably bring up a swag of leads to get you started, or you can google on "thailand association of investment management companies" to get the big-picture plus a spreadsheet showing all the funds on offer with past performance.

Oh and do a thaivisa forum search on "mutual funds", "managed funds" and/or "fund manager" to locate some interesting prior discussions on this subject.

Edited February 17, 2012 by chiangmaibruce

[kyb789]

Thanks Changmaibruce! Your comments are useful. I also would like to hear from someone that can recommend a well-known mutual fund company in Thailand (Just like in the US we have Vangard, Fidelity, etc) that are at the top of their class. Since I am new to this, any point in the right direction can help.

[ExpatJ]

My advice- dont buy a mutual or investment fund from anyone who sends you a private message through thaivisa !

I stopped investing in mutual funds a while back as the fees are always way too high- better to select a portfolio of blue chip companies and buy their stocks and pay about 0.2-0.3% fee compared to 4% plus for mutual funds fees

Edited February 17, 2012 by ExpatJ

[chiangmaibruce]

Yes, it is important to be mindful of management fees so let's look at average annual management fees for all Thai mutual funds as of end 2011:

Equity funds 1.29%

Mixed funds 1.13%

Fund of funds 1.09%

Fixed income funds 0.49%

Property funds mostly 0% (SET listed)

Money market funds 0.29%

How to choose your manager? Look at those earlier Thaivisa threads and see people's impressions on this issue ... another point of reference is perhaps googling on "Bangkok Post Lipper Thailand Funds Awards" and you can see previous winners in the various categories

[thrilled]

I'm not A mutual fund person myself.on the us stock exchange I invest in symbol "THD",it works for me.

[ExpatJ]

Yes, it is important to be mindful of management fees so let's look at average annual management fees for all Thai mutual funds as of end 2011:

Equity funds 1.29%

Mixed funds 1.13%

Fund of funds 1.09%

Fixed income funds 0.49%

Property funds mostly 0% (SET listed)

Money market funds 0.29%

How to choose your manager? Look at those earlier Thaivisa threads and see people's impressions on this issue ... another point of reference is perhaps googling on "Bangkok Post Lipper Thailand Funds Awards" and you can see previous winners in the various categories

Its not just the management fee- there are always other less obvious fees such as redemption fees, initial investment fee, withdraw fee, annual fees etc.. The 0% property funds in thailand you refer too charge 2-3% ' performance fees' annually for example and they often take a % from you when you redeem your investment too- called a 'spread'

.typically they are 4% or so...

Edited February 18, 2012 by ExpatJ

[inzman]

There are many online sites you can open an account. But I would be cautious, as TIT

[rgs2001uk]

Two of the largest in Thailand most will be familiar with are, ING and Aberdeen.

Both have offices in Bkk that you can deal with direct, no need to go through banks or agents.

A quick google search comes up with the following,

ING Thailand,

http://www.ingfunds.co.th/EN/index.asp

If you click on Mutual on the LH side it brings up the following page,

http://www.ingfunds.co.th/EN/MutualFunds.asp

Aberdeen funds and prices,

http://www.aberdeen-asset.co.th/aam.nsf/Thailand/fundsprices

Fact sheets for the various funds,

http://www.aberdeen-asset.co.th/aam.nsf/thailand/fundinformationfactsheets

These are for information purposes only, I am in no way connected with either and do not stand to gain anything with whatever you choose.

[kyb789]

You all have been a great help. I have researched as suggested and found a lot of information. Thanks alot! I know that some have said that the management fees in Thailand are quite high. I agree. Especially compared to the west where one can trade online for almost nothing. I guess TIT, and if someone can make me some profit and I don't have to worry about it, then giving them a small cut of the profits can be reasoned with. I am not an expert trader and if someone can make me money and I don't have to stress over it, then I can live with that. Thank you again for all your assistance.

[chiangmaibruce]

I'm not A mutual fund person myself.on the us stock exchange I invest in symbol "THD",it works for me.

Well you sort of, are, actually. THD is what is known as an "Exchange-traded fund"

http://www.investopedia.com/terms/e/etf.asp#axzz1mnwkfERp

[chiangmaibruce]

I know that some have said that the management fees in Thailand are quite high. I agree. Especially compared to the west where one can trade online for almost nothing.

I am not sure if perhaps you are getting confused between trading shares (or investing in an ETF) and investing in a mutual fund via a bank or fund manager. If the former, then you can also do that in Thailand "for almost nothing".

In terms of investment in a mutual fund I am not convinced that on average the cost of such investments is "much higher" in Thailand when all costs are factored in, and when comparing similar types of funds in each country. But given the large number of variables, without being given some specific examples, it's a bit hard to provide a meaningful response.

[chiangmaibruce]

The 0% property funds in thailand you refer too charge 2-3% ' performance fees' annually for example and they often take a % from you when you redeem your investment too- called a 'spread'

I would be interested to learn more about this - can you please provide some examples?

[chiangmaibruce]

Just a footnote on the issue of fees for Thai mutual funds for anyone who may be interested ...

refer http://corporate.morningstar.com/us/documents/MethodologyDocuments/ResearchPapers/GlobalFundInvestorExperience.pdf

and check out page 43 and pages 133-137

[OriginalPoster]

For a US citizen, buying THD is probably the easiest way. It's an ETF that can be bought through any stock broker in the US.

[KhunG]

For a US citizen, buying THD is probably the easiest way. It's an ETF that can be bought through any stock broker in the US.

I'd also recommend TTF. It's a closed-end fund that can be bought like a stock from any US broker. It's performed very well for me.

[OriginalPoster]

For a US citizen, buying THD is probably the easiest way. It's an ETF that can be bought through any stock broker in the US.

I'd also recommend TTF. It's a closed-end fund that can be bought like a stock from any US broker. It's performed very well for me.

Aside from open vs closed-end fund, a main difference between them is that THD is an index fund that seeks to match the performance of the MSCI Thailand Investable Market Index whereas TTF is an actively managed fund.

[Furbie]

kyb789 - if you want to invest in mutual funds, AND you are not planning to take advantage of the tax savings (in Thailand - US will tax you anyway) through an LTF etc., then you should be sending your money back to the US for investment.

In the US, it’s cheaper to buy/sell, cheaper for on-going fees and you will not be subject to PFIC reporting - plus the US is going to tax you on it anyway, so you might as well take advantage of the better investment options there.

Look into a discount brokerage or do it direct through Vanguard. From the US, you can invest in any type of mutual fund - even a Thai focused fund. My advice always remains the same: a diversified portfolio with indexed funds is the way to go for the long term, individual investor.

[fletchsmile]

I think you're confusing LTFs and RMFs, when you write:

I don't want an RMF (Retirement Mutual Fund) or LTF (Long Term Fund). These are funds that have a 500k max investement per year tax free for retirement purposes. I have this already through my Thailand employment and please don't talk to me more about the benefits, I am already maxed out on contributions. Everytime I go to a bank, they start talking about one of these!

LTF isn't a retirement product nor is it usually offered by employers. While retirement contributions up to 500k to an employers scheme count against the retirement limit, the LTF limit is a separate limit of 500k. So yes you are probably maxed out on RMF/pension tax relief for your pension via your employment, but it sounds like to are missing the additional 500k you could get from an LTF, which is why the banks raise it. There are 2 separate limits of THB 500k each. They are not interchangeable, so you couldn't do say 1,000k RMF and 0 LTF, and it needs to be 500k RMF and 500k LTF.

BTW You can exceed the 500k limit on an LTF and buy more. Just that you don't get any additional tax relief, so they effectively behave like any other mutual fund/unit trust.

The same providers of LTFs and RMFs also usually provide normal mutual funds or unit trusts. You can buy either thru your bank (or another agent) or the fund management house direct.

Aberdeen and ING provide a good range of funds, comparable to other countries. eg I hold Aberdeen Asia Pacific, Aberdeen Global Emerging Market in Thailand. I also hold them in UK. They are effectively feeder funds. There are also gold mutual funds eg TMB/MFC as well as oilfunds, eg Tisco, so there's a pretty wide range over here.

Edited February 28, 2012 by fletchsmile

[samran]

I too don't understand why LTF's aren't on the table for consideration.

Sure, you may have maxed out your tax free contribution, but above and beyond that threshold, you can still invest like any other mutual fund. If you like the fund and it performs well, then surely you just keep investing in it?

[BlackJack]

http://tools.morningstarthailand.com/th/fundquickrank/default.aspx?Site=th&LanguageId=en-TH