Set Index And Thai Mutual Funds

[fletchsmile]

I've been a big fan of the Thai stock market and Thai mutual funds for about 15 years (post 1997 crash), and am generally still bullish on Thailand's economic future and the Thai stockmarket if you're looking say 5-10 years+ or more. I've also done very well out of it over this period, compared to doom mongers of don't invest in Thailand blah blah blah, particularly if you also add in the strengthening of the baht.

I'm also an advocate of equities being one of the best long term investments for wealth creation, and that if you live in Thailand and are building for the future building some Thai assets in THB is a sensible move. So again putting these together, baht cost averaging some of your money into THB Thai equities via unit trusts/ mutual funds makes sense.

From time to time I also share these views on here and also people PM me about thoughts on this. With this in mind, I thought I'd share my views of where we are now, and welcome other people's thoughts. To PM everyone with slight shifts/ updates in my thinking would take too long, so thought I'd post here.

General Thai Market:

For the SET: at 1627, with a P/E of 18.76 and div yield of 2.61%,it doesn't look cheap.1627 is close to all time highs, and it's also had a good run of being up 17% this year.

The average P/E since 1975 is just over 12. That includes several years of single digits where it wasn't a particularly well known market, so a high liquidity and risk premium. When things got frothy in the past in 1990's in reached a P/E around 27. I'm more comfortable with a historic P/E of below 15 and div yield of 3-4%. For me I can justify a P/E of 15 based on the long time average, and knowing Thailand is much more stable now economically, and has learnt many lessons, with better management of monetary policies by BOT. A P/E of 18-19 looks high, but then again many brokers are looking for 20%+ growth in earnings this year, so looking forward that brings it back in line for me. IF the earnings pan out. Even so it again looks quite fully valued.

A quick note on the THB. Again it's had a good run. Longer term I expect it to gain against the major western currencies, although shorter term is also difficult to call. So I see holding THB and THB assets longer term as a resident in Thailand as a good move for some of your money.

So what would be my approach? That depends if you're looking for wealth creation or wealth preservation

Firstly I'd say the Thai market is notoriously difficult to call, which is why I like baht cost averaging. I've watched over the years people predict falls and miss out on gains, and predict gains and get a nasty shock. So while at the moment things may look high it could still surprise for the upside.

Thailand for investing for me is definitely one of those "time in the market" rather "timing the market countries"

1) Wealth creation: i.e If I hadn't reach my financial goals and financial independence and was still saving and investing for the future, and earning an income. I'm past this stage for myself, but still at this stage for investing on behalf of my kids, so still have some skin in the game

- I'd still be OK investing in the Thai stock market as long as I was looking 5-10 years+, as I'm comfortable it would in all likely-hood be higher.

- So I'd still continue with baht cost averaging each month. What I'd be tempted to do though would be cut my monthly contributions for a while. So instead of investing say 10k a month, invest 5k a month or 10k every 2 months. I used to do this from time to time while wealth building. i.e don't stop investing just reduce a bit. This is what I'm doing for my kids' futures

2) Wealth preservation: I'm at this stage now for myself. I've built my portfolio, and interested more in making sure I don't lose it, and keeping its pace with inflation and maintaining value, than mega returns. What I've been doing recently for Thailand is rebalancing. i.e sold some Thai equity fund units. Basically because of successes in Thailand I have a higher weighting than I'd prefer. At one time well over 40% in Thai equities. So I've trimmed it back a little. for my favourite fund Aberdeen Growth over the last couple of years I've actually taken out about double my original investment, but as it's up around 1,450% I've still a large holding up over 10 times what I started with. I makes sense to keep rebalancing, as 40%+ is too high, and if the market feels high, reduce a bit.

So there's 2 strategies I'm pursuing: one for my kids' and one for me.

BTW I'm not talking about trading here on short term time horizons, I'm talking investments for long term. I would also add I've quite well diversified across different asset classes, and countries, even though here I've only focused on the SET and Thailand. This is only part of my assets, and they're certainly not all in one basket.

A slightly more sophisticated strategy I've added to the second investment strategy, is selling a few calls on TFEX SET50 options to generate a little extra income as I feel values are high for the SET. This generates income from the premium on the derivatives. However, should the market rise significantly I start to pay out to the buyers of the options. Given my long large Thai mutual fund equity positions dwarf the delta on the options, I'm not so worried, as gains on investments would easily cover potential liabilities on options written. I also manage/trade this dynamically. I wouldn't recommend for most people, but something to consider.

I'd welcome any other thoughts on the SET, Thai unit trusts, general investment, strategies etc

Cheers

Fletch

Edited May 18, 2013 by fletchsmile

[topt]

Hi Fletch thanks for that as I personally found it very interesting.

I would like to move some foreign cash into Thai denominated equities/funds but keep being put off by the current high historical levels. Whilst I agree with you over the "time in the market" it does not help if you invest at a potentially high point (now) and it drops back only to come back to the same level in 5/10 years. The same is obviously true of any market especially looking at the US and UK markets at the moment.

Unless you are in some reasonably high paying dividend stocks you will lose out to inflation - which of course also happens if you stay in cash . Yes I have been prevaricating. Although I like the idea of being protected against the exchange rate not being 100% physically in Thailand is not helping my decision making.

Also what is your view on fees if you have a fair slug of capital isn't baht cost averaging going to cost you a fair bit in fees?

[seasia]

Hi Fletch

Thanks also from me for that.

Have you any thoughts on Thai based REITS ?

For mid/long term baht based income.

I hold a fair few UK based ones, no Thai ones though.

I`m wondering also choosing between maybe Singapore or Thailand based REITS.

I think Sing based REITS are averaging 5.3 %, don`t know about Thai ones.

Any ideas/comments.

Thank You.

[Naam]

I'd welcome any other thoughts on the SET, Thai unit trusts, general investment, strategies etc

you have never mentioned fixed income Fletch. do you abhor bonds as much i abhor stocks?

[fletchsmile]

Hi Fletch thanks for that as I personally found it very interesting.

I would like to move some foreign cash into Thai denominated equities/funds but keep being put off by the current high historical levels. Whilst I agree with you over the "time in the market" it does not help if you invest at a potentially high point (now) and it drops back only to come back to the same level in 5/10 years. The same is obviously true of any market especially looking at the US and UK markets at the moment.

Unless you are in some reasonably high paying dividend stocks you will lose out to inflation - which of course also happens if you stay in cash . Yes I have been prevaricating. Although I like the idea of being protected against the exchange rate not being 100% physically in Thailand is not helping my decision making.

Also what is your view on fees if you have a fair slug of capital isn't baht cost averaging going to cost you a fair bit in fees?

Hi topt

On the fees in Thailand, I find them pretty reasonable in the context of returns:

- Around 1 to 1.5% total for front end and back end (rare someone actually levies both) as a one off

- Around 1.8% a year total

If I took Aberdeen Growth (ABG) as an example from 2001 to date, that's 10 years with double digit +ve returns, 1 year single digit +ve, and 2 years -ve. In all the time I'm holding it, I have an annualised return of 22.5% (after charges). The key for me is focusing on net returns.

On the timing, the prevarication is exactly the problem. We see posts on here from example "the Nation" newspaper, where people are waiting for a pullback. One columnist had been waiting for a few years for a 20%-30% pullback, meanwhile missing gains on say ABG in 2009/10/11/12/13. When that pullback happens (and it will one day) the gains they missed out on far outweigh what they saved in the correction.

The other thing I'd say is that if that 20% - 30% pull back happens those same people will still often prevaricate in case it falls further.

The SET may pull back from here or not. The key is if you think 5/10 years from here it will be higher. If you think a good chance not, then stay away. If as I think a good chance yes, then add in. Accept you'll never get the best time. There's always the what if's. Even on my returns I look and think there were times I could have done better with hindsight. But then again I should be happy with average double digit returns over 15 years.

So my suggestion in first post, is if you're uncomfortable now, but you want to build wealth, maybe just reduce monthly investments. Instead of 20k a month, do 10k, or 5k or whatever, but at least do something if you are trying to build wealth and if you think it will be higher in 5 years. Similarly when you're more comfortable and feel it's low you could do more. This is sort of part way between all or nothing, but means you make a start which is the most important thing

Another thing worth bearing in mind is tax. If you work here and pay tax. Then LTFs get you tax back, which reduces even further the risk of it being lower in 5 years. When I was paying 37% tax, I was getting 100 baht of investment for 63 baht. So it had to fall 37% before I was worse off.

Cheers

Fletch

[fletchsmile]

Hi Fletch

Thanks also from me for that.

Have you any thoughts on Thai based REITS ?

For mid/long term baht based income.

I hold a fair few UK based ones, no Thai ones though.

I`m wondering also choosing between maybe Singapore or Thailand based REITS.

I think Sing based REITS are averaging 5.3 %, don`t know about Thai ones.

Any ideas/comments.

Thank You.

I think Thai based REITs could have a place for people looking to generate income. I don't hold any myself as like you I get my property exposure elsewhere. They aren't that well developed here in Thailand, and are sometimes a bit lacking in transparency.

ING (now UOB) have some property funds, with some reasonable yields, but you have to read up carefully to try and work out what is a return of capital and what is income as the yields include both, because properties are often leased with fixed terms instead of owned.

It's something I was planning to look more into now I'm looking for income generation rather than building capital. There are also property funds by people like Major, which you know is a reasonable name.

Singapore REITs look a safer and more transparent bet, but yields are lower. SGD as a currency is less volatile than THB. SGD also likely to better hold its value vs THB than western currencies.

Cheers

Fletch

[fletchsmile]

I'd welcome any other thoughts on the SET, Thai unit trusts, general investment, strategies etc

you have never mentioned fixed income Fletch. do you abhor bonds as much i abhor stocks?

I don't think I could ever abhor an investment as much as you abhor stocks Naam

I never used to like Fixed Income, though, and in the first couple of decades of investing hardly ever touched it. I still believe long term equities are the best class for building wealth. Also growing up for many years interest rates on cash in UK weren't much different than UK bond yields, so weren't worth the hassle. Given the ease of cash accounts with decent rates, and the higher returns on equities there didn't seem much of a need for bonds given my time horizons.

In the last few years though, I've become more of a fan of fixed income, for a few reasons:

- I'm now in more of a wealth preservation stage, so happy to trade some lower return for lower risk

- Diversification - a need highlighted well since 2007

- Very low cash rates. So I have sort out higher yield corporate bonds

- With global bank failures it's important to recognise the credit risk on cash. Previously like many people I looked at bank deposits as safe, whereas bonds had credit risk. This difference is gone. Both have credit risk, even with govt guarantees.

In Thailand I don't find fixed income rates particularly attractive compared to cash rates, so hold little THB fixed income. I would like more, but it's just not that attractive to me at current levels.

I've around 7% of my investment portfolio in fixed income now - compared to next to zero a few years back. I'd like to add to it, but with interest rates so low, I think there'll be better opportunities ahead.

I know a fair amount about fixed income, and a lot in theory from work in accounting for it and measuring risk. That's different again to hands on actual own experience though.

There's a certain German Klingon, with a sharp sense of humour, on here who springs to mind though, when I think about Fixed Income investing. One of the things I like about TV is there are some people on here with expertise in certain areas. I bow to you in that area my friend

Edited May 19, 2013 by fletchsmile

[fletchsmile]

topt,

BTW Your post reminded me of a check I haven't done for a while so I just did. Basically if you take every single month end from Dec 2000 to today, and compare every 5 and 10 year period, and see how many times it lost money:

5Yrs

From Dec 2000 to today, there are about 100 complete 5 year periods using month ends: Jan2000 to Jan2005, Feb00 to Feb05 etc... up to Apr08 to Apr13. Of those 100 periods only 12 were negative. So:

- if you tried picking the best time and did a one off lump sum at a month-end, there's an 88% chance you'd make money and 12% chance you'd lose.

- But: If you did baht cost averaging spreading that same money over 60 monthly installments, what it means is that even if you picked the worst possible 60 months to do so, then 12 times in your sample you'd be down with 1/60 of your money, and 48 times in your sample you'd be up with 1/60 of your money. Overall you'd be comfortably up.

10Yrs

From Dec 2000 to day, there were about 40 complete 10 year periods using month ends: Jan2000 to Jan2010, Feb00 to Feb2010 etc up to Apr03toApr2013, and there were no negative periods, where you'd have lost money. So splitting your money over 60 monthly installments you'd always have been up

There are other checks I also do from time to time and this is only one.

Of course if you think we're in for a 1997 style crash that might be a different matter. There's always a risk of fat tail or black swan events - low probability high impact. I think Thailand is a very different place to the 1990's though. and don't see those conditions present. If anything they look more likely in the west!

Cheers

Fletch:)

Edited May 19, 2013 by fletchsmile

[Naam]

I've around 7% of my investment portfolio in fixed income now - compared
to next to zero a few years back. I'd like to add to it, but with interest rates so low,

I think there'll be better opportunities ahead.

until a year ago my thinking was the same. but now i'm convinced that the chaps

in charge will play their low interest game for years to come

except for two sovereign or quasi-sovereign debtors who's yields are double digits

one has to gamble with 'yuckish' debtors to achieve >10% p.a. an alternative are

subordinates with the attached risk of being called at par or government intervention

(SNS, Netherlands) expropriating shareholders and bondholders.

sold recently subs of Lloyds and Royal Bank of Scotland because of potential calls

and inspite of reasonably high yields. "A" rated subs of sound financial institutions

without possibility of call still yield 6-7% which is infinitely more than i am getting

on cash USD, GBP or €UR where my yield is zero.

[topt]

topt,

BTW Your post reminded me of a check I haven't done for a while so I just did. Basically if you take every single month end from Dec 2000 to today, and compare every 5 and 10 year period, and see how many times it lost money:

5Yrs

From Dec 2000 to today, there are about 100 complete 5 year periods using month ends: Jan2000 to Jan2005, Feb00 to Feb05 etc... up to Apr08 to Apr13. Of those 100 periods only 12 were negative. So:

- if you tried picking the best time and did a one off lump sum at a month-end, there's an 88% chance you'd make money and 12% chance you'd lose.

- But: If you did baht cost averaging spreading that same money over 60 monthly installments, what it means is that even if you picked the worst possible 60 months to do so, then 12 times in your sample you'd be down with 1/60 of your money, and 48 times in your sample you'd be up with 1/60 of your money. Overall you'd be comfortably up.

10Yrs

From Dec 2000 to day, there were about 40 complete 10 year periods using month ends: Jan2000 to Jan2010, Feb00 to Feb2010 etc up to Apr03toApr2013, and there were no negative periods, where you'd have lost money. So splitting your money over 60 monthly installments you'd always have been up

There are other checks I also do from time to time and this is only one.

Of course if you think we're in for a 1997 style crash that might be a different matter. There's always a risk of fat tail or black swan events - low probability high impact. I think Thailand is a very different place to the 1990's though. and don't see those conditions present. If anything they look more likely in the west!

Cheers

Fletch:)

That is very interesting data thanks Fletch.

My point about charges was more re any separate transaction costs - IE 60 x ? is a lot more than say 5 x ?. This may not apply to funds but presumably will to shares?

When I looked at the Aberdeen site a while ago it mentioned a back end fee. Is there also a spread? I agree looking at net returns but if returns are not what they have been higher charges could eat away at those.

[topt]

I've around 7% of my investment portfolio in fixed income now - compared

to next to zero a few years back. I'd like to add to it, but with interest rates so low,

I think there'll be better opportunities ahead.

until a year ago my thinking was the same. but now i'm convinced that the chaps

in charge will play their low interest game for years to come

except for two sovereign or quasi-sovereign debtors who's yields are double digits

one has to gamble with 'yuckish' debtors to achieve >10% p.a. an alternative are

subordinates with the attached risk of being called at par or government intervention

(SNS, Netherlands) expropriating shareholders and bondholders.

sold recently subs of Lloyds and Royal Bank of Scotland because of potential calls

and inspite of reasonably high yields. "A" rated subs of sound financial institutions

without possibility of call still yield 6-7% which is infinitely more than i am getting

on cash USD, GBP or €UR where my yield is zero.

Slightly off from fletch's topic so i hope he will forgive me this off piste moment

Any view Naam on the Co Ops bonds (now definitely not A rated?)

http://www.telegraph.co.uk/finance/personalfinance/consumertips/banking/10064958/Should-you-buy-a-17pc-Co-op-bond.html

[NeverSure]

"I've been making a lot of money doing X for the past 15 years, so I am assured of making a lot of money doing the same for the next 15 years."

Or, "Sell high, buy low."

There are really only two choices.

[Naam]

I've around 7% of my investment portfolio in fixed income now - compared

to next to zero a few years back. I'd like to add to it, but with interest rates so low,

I think there'll be better opportunities ahead.

until a year ago my thinking was the same. but now i'm convinced that the chaps

in charge will play their low interest game for years to come

except for two sovereign or quasi-sovereign debtors who's yields are double digits

one has to gamble with 'yuckish' debtors to achieve >10% p.a. an alternative are

subordinates with the attached risk of being called at par or government intervention

(SNS, Netherlands) expropriating shareholders and bondholders.

sold recently subs of Lloyds and Royal Bank of Scotland because of potential calls

and inspite of reasonably high yields. "A" rated subs of sound financial institutions

without possibility of call still yield 6-7% which is infinitely more than i am getting

on cash USD, GBP or €UR where my yield is zero.

Slightly off from fletch's topic so i hope he will forgive me this off piste moment

Any view Naam on the Co Ops bonds (now definitely not A rated?)

http://www.telegraph.co.uk/finance/personalfinance/consumertips/banking/10064958/Should-you-buy-a-17pc-Co-op-bond.html

sorry Topt, i can't comment on bonds, in this case perpetual subordinates, without going through the bond prospectus and the balance sheet of the company. "Co Op" has never been on my radar and i must admit i have no idea.

[chiangmaibruce]

Hi Fletch

Thanks also from me for that.

Have you any thoughts on Thai based REITS ?

For mid/long term baht based income.

I hold a fair few UK based ones, no Thai ones though.

I`m wondering also choosing between maybe Singapore or Thailand based REITS.

I think Sing based REITS are averaging 5.3 %, don`t know about Thai ones.

Any ideas/comments.

Thank You.

This regularly-updated report might be of interest to you: http://kelive.maybank-ke.co.th/KimEng/servlet/ReportListingServlet?action=ViewDerivative&DBId=2&rid=21006〈=1

PS: Fletch. Good work with the info you've provided in this thread. I'd absolutely agree about the difficulty of attempting to predict short-term movements in the Thai market

Edited May 20, 2013 by chiangmaibruce

[ExpatJ]

Aberdeen fees are not bad- but I note the interesting advice sent out by one of Goldman Sachs chief global investment advisors last week on his retirement . He noted that 75% of all mutual funds return less than low cost , tax friendly stock exchange index funds over any given period of time( index fees avg 0.2 % per year- 30 times less than Aberdeen ) with fees being one of the key factors of mutual funds under performing relative to index funds. He told all of his ex

Clients that if they want a good return just buy into various western and emerging market index funds and leave for a few years- historically that returns higher than mutual funds and individual stocks.

so what I am doing is parking a chuck of my cash ( currently earning zero taking into account inflation) ad buying into some emerging market indexes ( smaller emerging markets in Africa. Latin America south easy Asia plus USA ) and sum blue chip dividend stocks in USA-

[ExpatJ]

Good thread by the way- but would be now useful if people were suggesting and providing supporting info on products to invest in NOW not flagging a fund that the poster bought 15 years ago that went up a 1000%- interesting , but not great guidance for investing now :-)

[Phronesis]

Blah blah blah.....

Everyone is an expert in a bull market.

Here is a little test for Fletch and the other self proclaimed financial experts posting on this thread.

If you can answer all of the following three questions correctly, I will endorse you as actually having some knowledge about investing Thailand, rather than just having the dumb luck of being in the right place at the right time.

Question one

Which Thai bank has developed an algorithm driven bot to trade the SET, and through one of its wholly own subsidiaries, uses it to "automatically" trade with funds from the accounts of subscribed high net worth investors?

Question two

What is the minimum required investment deposit to qualify for access to the above mentioned trading bot?

Question three

What firm will be floating a SET reverse ETF later this year?

[Phronesis]

Good thread by the way- but would be now useful if people were suggesting and providing supporting info on products to invest in NOW not flagging a fund that the poster bought 15 years ago that went up a 1000%- interesting , but not great guidance for investing now :-)

Yes...hindsight is a worthless commodity.

Edited May 20, 2013 by Phronesis

[fletchsmile]

I've around 7% of my investment portfolio in fixed income now - compared

to next to zero a few years back. I'd like to add to it, but with interest rates so low,

I think there'll be better opportunities ahead.

until a year ago my thinking was the same. but now i'm convinced that the chaps

in charge will play their low interest game for years to come

except for two sovereign or quasi-sovereign debtors who's yields are double digits

one has to gamble with 'yuckish' debtors to achieve >10% p.a. an alternative are

subordinates with the attached risk of being called at par or government intervention

(SNS, Netherlands) expropriating shareholders and bondholders.

sold recently subs of Lloyds and Royal Bank of Scotland because of potential calls

and inspite of reasonably high yields. "A" rated subs of sound financial institutions

without possibility of call still yield 6-7% which is infinitely more than i am getting

on cash USD, GBP or €UR where my yield is zero.

Slightly off from fletch's topic so i hope he will forgive me this off piste moment

Any view Naam on the Co Ops bonds (now definitely not A rated?)

http://www.telegraph.co.uk/finance/personalfinance/consumertips/banking/10064958/Should-you-buy-a-17pc-Co-op-bond.html

sorry Topt, i can't comment on bonds, in this case perpetual subordinates, without going through the bond prospectus and the balance sheet of the company. "Co Op" has never been on my radar and i must admit i have no idea.

topt

the following article may be of interest:

http://www.moneyweek.com/investment-advice/how-to-invest/strategies/right-side-co-op-great-bond-for-the-brave-63913

I'd also thought of it, but haven't had time to explore it. The author believes that the parent company will support the bank and is 99.9% certain of it. That's the key risk on this one. I'd say there's a very good chance but less optmistic. Generally in the banking world there's a big focus on capital, and companies generally for that matter. There's a greater tendency than there's ever been to sell of non-core assets, so while a very good chance, not 99.9% in my view.

Regards

Fletch:)

[fletchsmile]

Aberdeen fees are not bad- but I note the interesting advice sent out by one of Goldman Sachs chief global investment advisors last week on his retirement . He noted that 75% of all mutual funds return less than low cost , tax friendly stock exchange index funds over any given period of time( index fees avg 0.2 % per year- 30 times less than Aberdeen ) with fees being one of the key factors of mutual funds under performing relative to index funds. He told all of his ex

Clients that if they want a good return just buy into various western and emerging market index funds and leave for a few years- historically that returns higher than mutual funds and individual stocks.

so what I am doing is parking a chuck of my cash ( currently earning zero taking into account inflation) ad buying into some emerging market indexes ( smaller emerging markets in Africa. Latin America south easy Asia plus USA ) and sum blue chip dividend stocks in USA-

There's a few other threads on index funds. My views are set out here among others

http://www.thaivisa.com/forum/topic/621659-investment/page-2

For me the ones I pick in Thailand consistently outperform the market. The index vs active debate is much more valid for the US. Indeed for US I do use index funds often in preference to active. The GS data is talking about funds in places like US which is a different ballgame. There research is not based on countries like Thailand

[jji23]

Thanks for such an informative post.

How the devil are you? Still in Vietnam?

It was you who advised me to go into LTF, in 14 months of baht cost averaging I've made an unrealised profit of over 30%! Very happy indeed.

Going into my next chosen fund (aberdeen small cap) as soon as visa renewed at end of June.

Mulling over opening a broker account here in Thailand for investing in individual stocks, where can I find info on SET index like an investment magazine or something?

Also, opening HL account next month for UK stocks.

The wife and I adopted a baby boy since we last spoke.

[topt]

until a year ago my thinking was the same. but now i'm convinced that the chaps

in charge will play their low interest game for years to come

except for two sovereign or quasi-sovereign debtors who's yields are double digits

one has to gamble with 'yuckish' debtors to achieve >10% p.a. an alternative are

subordinates with the attached risk of being called at par or government intervention

(SNS, Netherlands) expropriating shareholders and bondholders.

sold recently subs of Lloyds and Royal Bank of Scotland because of potential calls

and inspite of reasonably high yields. "A" rated subs of sound financial institutions

without possibility of call still yield 6-7% which is infinitely more than i am getting

on cash USD, GBP or €UR where my yield is zero.

Slightly off from fletch's topic so i hope he will forgive me this off piste moment

Any view Naam on the Co Ops bonds (now definitely not A rated?)

http://www.telegraph.co.uk/finance/personalfinance/consumertips/banking/10064958/Should-you-buy-a-17pc-Co-op-bond.html

sorry Topt, i can't comment on bonds, in this case perpetual subordinates, without going through the bond prospectus and the balance sheet of the company. "Co Op" has never been on my radar and i must admit i have no idea.

topt

the following article may be of interest:

http://www.moneyweek.com/investment-advice/how-to-invest/strategies/right-side-co-op-great-bond-for-the-brave-63913

I'd also thought of it, but haven't had time to explore it. The author believes that the parent company will support the bank and is 99.9% certain of it. That's the key risk on this one. I'd say there's a very good chance but less optmistic. Generally in the banking world there's a big focus on capital, and companies generally for that matter. There's a greater tendency than there's ever been to sell of non-core assets, so while a very good chance, not 99.9% in my view.

Regards

Fletch:)

Thanks Fletch. I actually read that and some other articles this afternoon - including skimming the thread on TMF of over 100 posts!

I think the biggest question is how big the hole may be and it may be a while before that is fully answered.

[fletchsmile]

Good thread by the way- but would be now useful if people were suggesting and providing supporting info on products to invest in NOW not flagging a fund that the poster bought 15 years ago that went up a 1000%- interesting , but not great guidance for investing now :-)

The advice now was I still think the approach works, but be careful. In 15 years it's rare less bullish than now about about Thai investing. I'm still bullish, just less so. The suggestions are:

Wealth creation: still baht cost average but less than before

Wealth preservation: take the opportunity to rebalance if necessary and take some money off the table.

Other Thai funds:

Bualuang Top10 - consistently good performer, higher risk though, and less history

ING Thai Equity/ Good Corp Governance - good but be careful as UOB bought them out. they're having a very good year this year.

Also LTF funds for the tax like Aberdeen LTF

Other non Thai equity funds

You could also use TMB or MFC to add some gold exposure as a little insurance and diversify

I also like KTAM World Mining and KTAM Energy for longer term. Both these sectors globally have been very beaten up, and are out of favour. In my view good time to pick up some long term potential on the cheap. They are feeder funds linked to Allianz. Convenient to buy here, no double charge, and no capital gains tax in Thailand

Also I like Aberdeen European. Good fund. Beat up market. Long term investment.

Also I like Aberdeen Global Emerging Markets. For those want to rebalance a bit, and had some very good years in Thailand. Consider switching some from Thai funds to here, as it has a broader exposure than just Thailand. Worth rotating maturing Thai Equity LTFs into here too once the 5 years are up, so you don't become so dependent on Thailand. I hold that in UK, Singapore and Thailand in different versions, and has been long term great.

With the exception of the Thai funds, all the others you're taking on FX risk if looking at THB terms.

Stay away from Aberdeen's US fund. It consistently has poor performance. Better to buy a US index fund if you really want US expsoure.

I also like Aberdeen Global Emerging Markets Bond Fund. For diversification, good fund, and bond exposure. I don't like western gov bonds, but higher yielding emerging markets make sense.

Anyway, a few ideas for the future.... All the above are available in Thailand

[fletchsmile]

Thanks for such an informative post.

How the devil are you? Still in Vietnam?

It was you who advised me to go into LTF, in 14 months of baht cost averaging I've made an unrealised profit of over 30%! Very happy indeed.

Going into my next chosen fund (aberdeen small cap) as soon as visa renewed at end of June.

Mulling over opening a broker account here in Thailand for investing in individual stocks, where can I find info on SET index like an investment magazine or something?

Also, opening HL account next month for UK stocks.

The wife and I adopted a baby boy since we last spoke.

Excellent news... congratulations on the adoption. Those are the important things in life.

Cheers for the note, mate. Yes still in Vietnam for the moment, though at some point we'll be back in Thailand. Back in a week or so actually to finish renewing my Thai marriage visa extension for another year

You're actually one of the people I had in mind writing, above, mate, as over the years a lot of people have asked and I've said same old same old on this one. Difficult to send the same note to everyone. Hence the post, saying my view has changed a bit. Still worth it, but maybe reduce the baht cost averaging a little for a while.

Not sure what you're aiming for with Aberdeen small cap, as it's still Thai equities, but without the LTF tax wrapper. Might make more sense to continue with normal LTFs and get the tax. Then channel the money and have a look at Aberdeen Global Emerging Markets for a wider scope and a bit of diversification away from Thailand.

KGI have some good research info on Thai stocks. I use them as my Thai broker, and they send regular emails, research and ideas. To be honest individual stocks is good fun, but I doubt my ability to beat quality funds long term, without the time and research - I don't have at the moment.

http://www.kgieworld.co.th/en/index.asp

Trust you also have your emergency cash fund set up too mate, particularly now you're a father . Congrats again.

Great to here from you

Fletch:)

Edited May 20, 2013 by fletchsmile

[daboyz1]

Aberdeen fees are not bad- but I note the interesting advice sent out by one of Goldman Sachs chief global investment advisors last week on his retirement . He noted that 75% of all mutual funds return less than low cost , tax friendly stock exchange index funds over any given period of time( index fees avg 0.2 % per year- 30 times less than Aberdeen ) with fees being one of the key factors of mutual funds under performing relative to index funds. He told all of his ex

Clients that if they want a good return just buy into various western and emerging market index funds and leave for a few years- historically that returns higher than mutual funds and individual stocks.

so what I am doing is parking a chuck of my cash ( currently earning zero taking into account inflation) ad buying into some emerging market indexes ( smaller emerging markets in Africa. Latin America south easy Asia plus USA ) and sum blue chip dividend stocks in USA-

Index funds seem to be the way to go. Earlier this year I went to an investment adviser on the recommendation of a friend and put some money with them and let them decide what to do with it. They put me in a few equity mutual funds. I noticed something curious. When the S&P 500 went up let's say .5% in a day, the funds that I owned would go up ~.3%. However, when the S&P 500 would go down .5%, the fund I owned would go down ~.8%. Of course this was over a few months time so there really wasn't a large enough sample to draw any conclusions. This did get me looking into these funds though. I went back and looked over past 1,3,5,10 years and none of these funds had ever come close to the performance of the S&P 500.

This got me looking a little deeper. There are all kinds of expense fees, 12-b1 fees, sales charges etc. with these funds. I watched a documentary on PBS here in the U.S. called Frontline. "The retirement gamble" was the name of the episode. That was the final straw. Turns out the funds that this "investment adviser" had me in had all kinds of associated 12b-1 fees, expense fees etc. etc. I called them and asked about this. The had no answer at all. I closed that account and moved my money into an S&P 500 index fund that has an annual expense fee of .06%. No other fees at all associated with it.

I think everyone that has money in a mutual fund or a 401k should watch that PBS documentary. I think you can watch it online for free. They went to few of these high priced fund managers and asked them why the vast majority of them could not even keep up with a simple index, and then on top of it charged these outrageous fees. The only answer they had was "We'll have to look at the numbers."

Here's the link to it. You can watch it online:

http://www.pbs.org/wgbh/pages/frontline/business-economy-financial-crisis/retirement-gamble/the-retirement-gamble-facing-us-all/

Edited May 20, 2013 by daboyz1

[PCA]

Aberdeen fees are not bad- but I note the interesting advice sent out by one of Goldman Sachs chief global investment advisors last week on his retirement . He noted that 75% of all mutual funds return less than low cost , tax friendly stock exchange index funds over any given period of time( index fees avg 0.2 % per year- 30 times less than Aberdeen ) with fees being one of the key factors of mutual funds under performing relative to index funds. He told all of his ex

Clients that if they want a good return just buy into various western and emerging market index funds and leave for a few years- historically that returns higher than mutual funds and individual stocks.

so what I am doing is parking a chuck of my cash ( currently earning zero taking into account inflation) ad buying into some emerging market indexes ( smaller emerging markets in Africa. Latin America south easy Asia plus USA ) and sum blue chip dividend stocks in USA-

Most of this is not important to read but I'll add my skills. Thailand and Aberdeen is(after doing research) a cocktail of both - decent performance and safety. At least from what the current fund managers have been doing until date. We'll have a "benchmark" correction imminent of at least 10% so what counts is to see how they'll manage such sort of scenario and as far as my research goes back they did well comparatevely.

To Phroenesis:

HFT and other sorts of computerized market manipulation is not present in Thailand (yet). Beyond that it is not the dominating force in the global markets these days but rather a measurement of desperation trying to fix things for the benefit of all (in favor of share markets) but unfortunately gold and bonds down in order to breed new investors. Trades are carried out that way but they serve a purpose which has not only bad sides.

We(eye) can clearly see that Japan for example is used as an essential tool to keep Asia balanced or better said to block China and it's expansion plans (can be discussed in detail if there is interest).

Thailand as ever is not important, no more than luring clueless people in in order to shake them out later.

Good thread anyway, didn't read much though.

[cocopops]

The average P/E since 1975 is just over 12. That includes several years

of single digits where it wasn't a particularly well known market, so a

high liquidity and risk premium. When things got frothy in the past in

1990's in reached a P/E around 27. I'm more comfortable with a historic

P/E of below 15 and div yield of 3-4%.

It's true that the current earnings and dividend yields are low all around the world compared to their "long-term averages". But it's also true that there are a lot of years with very high inflation and very high safe fixed income yields contributing to those averages. Is an emerging market with an earnings yield of 6% today (vs. 10 year Thai government of roughly 3.4%) better or worse than the same market with a PE of 10 when the 10 year bond rate approaches 7% (2005 peak) or higher*?

* As I suspect it was through the 80s and 90s. Can't be arsed figuring out how to check that now....

Edited May 21, 2013 by cocopops

[fletchsmile]

For those interested in the SET, KGI's recent strategy note may be of interest. They've revised their year end target to 1,800, which is around 10% up on today's close. Some of the justifications are earnings beating expectations - something I raised as an issue if expectations aren't met, and here they're saying exceeded so good news. They're also basing it on a forward P/E of 14 to 15. That's sort of my historic benchmark, so above in today's terms, but may be in line by y/e.

http://research.kgieworld.co.th/recom.nsf/0/8203045BB6F1A6CB47257B72000435A3/$file/Daily+Story_Strategy_2013_05_21_e_th.pdf

I mentioned mining and energy being beat up. I've been adding a little to these via KTAM's funds for the kids future, so 10 years+ down the line, I think people will look back and see it as cheap. Below is another view on this sector. Also says they beat up, some maybe time to consider, but they give a couple of words of caution why being contrarian may not be a good idea:

http://www.moneyweek.com/investments/commodities/miners-are-detested-by-investors-is-it-time-to-buy-64000

Cheers

Fletch

[topt]

For those interested in the SET, KGI's recent strategy note may be of interest. They've revised their year end target to 1,800, which is around 10% up on today's close. Some of the justifications are earnings beating expectations - something I raised as an issue if expectations aren't met, and here they're saying exceeded so good news. They're also basing it on a forward P/E of 14 to 15. That's sort of my historic benchmark, so above in today's terms, but may be in line by y/e.

http://research.kgieworld.co.th/recom.nsf/0/8203045BB6F1A6CB47257B72000435A3/$file/Daily+Story_Strategy_2013_05_21_e_th.pdf

I mentioned mining and energy being beat up. I've been adding a little to these via KTAM's funds for the kids future, so 10 years+ down the line, I think people will look back and see it as cheap. Below is another view on this sector. Also says they beat up, some maybe time to consider, but they give a couple of words of caution why being contrarian may not be a good idea:

http://www.moneyweek.com/investments/commodities/miners-are-detested-by-investors-is-it-time-to-buy-64000

Cheers

Fletch

Thanks again Fletch. Are KGI generally considered conservative in their predictions or usually more on the bullish side?

[Phronesis]

Blah blah blah.....

Everyone is an expert in a bull market.

Here is a little test for Fletch and the other self proclaimed financial experts posting on this thread.

If you can answer all of the following three questions correctly, I will endorse you as actually having some knowledge about investing Thailand, rather than just having the dumb luck of being in the right place at the right time.

Question one

Which Thai bank has developed an algorithm driven bot to trade the SET, and through one of its wholly own subsidiaries, uses it to "automatically" trade with funds from the accounts of subscribed high net worth investors?

Question two

What is the minimum required investment deposit to qualify for access to the above mentioned trading bot?

Question three

What firm will be floating a SET reverse ETF later this year?

Mmm surprise surprise...no takers on my LITTLE challenge...