Set Index And Thai Mutual Funds

[fletchsmile]

Emerging markets: buy sell or hold?

http://www.hl.co.uk/news/articles/emerging-markets-buy-sell-or-hold?utm_source=Silverpop&utm_medium=email&utm_campaign=E00MR_Daily%20update_open%20video%20(5)&utm_content=www_hl_co_uk_news_articles_eme&theSource=E00MR&Override=1&sp_mid=45014361&sp_rid=ZmxldGNodGhhaTY4QHlhaG9vLmNvbQS2

I like many of the EMs at the moment, and like the idea they are out of favour, and where I am adding to equities drip feeding/ baht/pound cost averaging into EMs is definitely up there...

Thailand down only 2% YTD....

Cheers

Fletch

Edited February 4, 2014 by fletchsmile

[ExpatJ]

Buy for sure! I did this week in Thailand ( despite being over weight already in Thai stocks)

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[fletchsmile]

Good basic investment 101 for anyone starting out investing in equities/unit trusts/mutual funds.

Graph also shows how cash failed to keep pace with inflation in times since GFC. Hence the hidden risk theme.

http://www.hl.co.uk/news/articles/a-hidden-danger-to-your-wealth

Cheers

Fletch

[fletchsmile]

Some good research on Aberdeen Emerging Market Fund, which has been one of my favourites for years.

http://www.hl.co.uk/funds/fund-news-and-investment-ideas/fund-news--and--alerts/aberdeen-emerging-markets-equity-fund-research-update?utm_source=Silverpop&utm_medium=email&utm_campaign=E0FRN_Aberdeen%20Emerging%20Markets%20Equity%20Fund_research%20update%20(1)&utm_content=Read%20our%20latest%20comment_1&theSource=E0FRN&Override=1&sp_mid=45023220&sp_rid=ZmxldGNodGhhaTY4QHlhaG9vLmNvbQS2

Note: this isn't exactly the same as the Aberdeen Global Emerging Growth fund sold in Thailand, but very similar. I also hold the Thailand version for me and my family here, which I think is a great fund from a good fund management house.

A couple of interesting points to draw out:

- No active fund always beats the market/ benchmark index every year. This one has done 4 in the last 5.

- Over 10 years: the fund is also +308% vs sector average of 198%. A good argument for researching your funds and understanding them, and good argument against the passive index/benchmark/ETF style funds in EMs which will just keep pace with benchmarks.

- Good long term prospects for EMs despite short term headwinds - as we know only too well here at the moment

- Importance of understanding the different EMs and not viewing all markets the same. eg Mexico very different than Argentina. This is where passive index funds/ETFs again can fall down. An active fund should help steer away from Greece, Argentina etc, whereas an ETF tracker has no choice but to follow them down.

- Because it has been successful they have restricted sales to try and keep the UK fund a reasonable size, so they don't become too big. Note: doesn't apply to the Thailand based fund.

4.7% of the fund is invested in Thailand, and the rest of the geographical split is here. (no Argentina, no Greece etc)

http://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/a/aberdeen-emerging-markets-equity-accumulation/fund-analysis/geographical-analysis

Cheers

Fletch

[GreenSnapper]

Fantastic fund. Last 3 years no profits, my saving account did better.

[fletchsmile]

And there lies the whole point of equities and investing. If youre worried about short term performance stay with cash. Over 10 years did you get 300%+ from your savings acc? Indeed one to sort the men from the boys long term

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[fletchsmile]

For those looking for a little extra yield on their THB cash but not wanting equity risk, CPALL (7-11/Makro Group) have a debenture issue open 28-30 Oct.

http://www.cpall.co.th/Corporate/invest-in-cp-all

3 Year: 4.1%

5 Year: 4.7%

7 Year: 5.1%

10 Yr: 5.35%

In multiples of THB 100k. Interest paid semi-annually.

Note: WHT tax rate is 15% - same as on amounts in savings accounts where your total bank interest exceeds the 20k threshold.

Bank interest totals less than 20k per year on savings account doesn't need to suffer tax.

So just factor those in. I would expect that most people subscribing earn above 20k a year in bank interest though, so rates are easy to compare for them on savings accounts and fixed deposits, as all would be taxable at same rate.

We've applied for the 3 year with some XS cash in Mrs.Smile's name. Rates aren't great, but a bit better than the 3% on simple cash, albeit with some credit risk. I don't see bank interest rates on your THB cash being much above 4.1% within 3 years, but didn't want to lock in for 5 years though.

Cheers

Fletch

As a follow on from the October post above: I had a report from KGI today that said that CP-All may be issuing some more bonds/ debentures

So far with hindsight I'm happy that we locked in some of the 3 year at 4.1% seeing as Thai interest rates have come down since then, and there's a reasonably good chance of another MPC rate cut to go further down.

No news yet on what the rates will be for this round - likely a bit lower than above if I'd have to guess. But 4% fixed rate for 3 years would look quite reasonable. Worth keeping an eye open for some people.

Cheers

Fletch

[fletchsmile]

2 months into the year: quite happy with the performance of the Thai stock markets given all that's been going on.

Up 4 to 5% YTD - pretty good considering where some of the developed markets stand. US looks overvalued on more or less any metric you care to use - UK and Europe look more potential. US was first first out of the blocks in "recovering" and hopefully the others, UK followed by Europe, will continue to follow.

Sometimes the way Thailand shoots itself in the foot temporarily helps in terms of diversification and being in slightly different cycles/ timings to other markets. Last year's under performance is helping Thailand ride out a lot of the bad news other countries are seeing this year. To date the domestic political crisis hasn't been as bad as had already been priced in last year....

With P/Es around 15 x, Thailand doesn't look overvalued in the same way markets like US do. Still volatile short term though...

Cheers

Fletch

Edited March 5, 2014 by fletchsmile

[fletchsmile]

Indicative rates on the CPALL debentures this month:

3yr = 3.75%

5yr = 4.3%

7yr = 4.85%

10 yr = 5.1%

Tenor (years) and Coupon (% per annum), Rating A

3-year
(3.75% p.a.)

5-year
(4.30% p.a.)

7-year
(4.85% p.a.)

10-year
(5.10% p.a.)

So 35 - 40 bp lower on the 3 and 5 year tenors and around 25bp on the longer dated. Less attractive than the last lot. I don't see BOT cutting rates by more than 25 - 50 bp. My money is on no rate cut on 12 March, and then 25bp later.

Cheers

Fletch

Edited March 10, 2014 by fletchsmile

[fletchsmile]

The passive/ETF/tracker vs active managed fund debate comes up from time to time:

The argument usually goes that: "the majority of (or the average) actively manage funds under performs the index or sector or market over time (due to charges etc) "

My counter-argument is so don't invest in "the majority" or "the average" actively managed fund then... If that's your plan you might as well invest in an index fund.

With the right research and putting in the time and effort you can shift your odds to above average rather than throwing darts.

Doesn't have to be either or though and all have their place. My take is Thailand, Emerging markets or markets I know well etc I prefer active managed funds, as I think there are certain key factors that give passive funds a disadvantage, plus I'm prepared to do my research and read that of others. USA I prefer ETFs/trackers, and same for commodities for the smaler charges...

Anyway the email I received this morning was interesting to see this in practice by someone else, and how picking the right funds led to 12 year out performance. The interesting twist being it is a fund of funds, which I'm usually not a fan of... (BTW I've taken out the adds too and have no connection to the company except being a client and happy with them)...

HL Multi-Manager Income & Growth
How our flagship fund has achieved market-beating long-term returns Dear Mr Smile History has shown equity income funds to be one of the best - and most reliable - ways to grow wealth over the long term. They invest in profitable businesses that pay healthy and rising dividends to shareholders, and offer the potential for growth in income and capital - though neither are guaranteed. Our research team dedicates considerable resources to identifying the best managers in this sector. The purest expression of this research is our fund and we wanted to let you know it has recently reached an important milestone. 200% growth in twelve years HL MM Income & Growth Annual growth (%) March 09-10 35.5 March 10-11 14.3 March 11-12 4.7 March 12-13 17.0 March 13-14 20.6 Past performance is not a guide to the future. Anyone who invested £10,000 at launch and reinvested dividends would now have an investment worth over £30,000. Those who elected to take the income have received £6,279 in dividends, and their capital is worth £19,614. Remember that past performance is not a guide to future returns, and the income paid will vary and is not guaranteed. This makes it one of the best performing funds in the sector, and it has comfortably outperformed the market as a whole. These returns have been achieved over a period which has included the Iraq war, the financial crisis and the subsequent recession, and during which interest rates have fallen to record lows. Please remember past performance is not an indication of future returns, and the fund can fall in value as well as rise, so you could get back less than you invest. 3.7% yield - with potential to rise (variable and not guaranteed) We are as positive on the outlook for the equity income sector as ever. Companies have recovered strongly from the financial crisis and profits, and the dividends paid from them, are rising. Today the fundt yields 3.7%, comfortably more than available from most deposit accounts, and the income has the potential to rise over time. Remember, dividends are not guaranteed and will vary over time, and unlike cash the capital will rise and fall in value. Any investment should be considered long-term.

Edited March 13, 2014 by fletchsmile

[cheeryble]

Thanks for last two informative posts Fletch actually CPALL may be a reasonable park.

On the disadvantage side if I learned I had two years to live I'd want to spend like hell and make sure I wasn't gonna be the richest man in the graveyard,...... are they untradeable and un-early-redeemable (except at swingeing terms)?

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Edited March 13, 2014 by cheeryble

[fletchsmile]

Thanks for last two informative posts Fletch actually CPALL may be a reasonable park.

On the disadvantage side if I learned I had two years to live I'd want to spend like hell and make sure I wasn't gonna be the richest man in the graveyard,...... are they untradeable and un-early-redeemable?

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Yes after the rate cut, I had a think again. But will still probably pass - partly cos I bought last time

They're not tradeable on an exchange.

But if you want them early I believe you can sell thru a bank - probably a penalty/ fee. BKK Bank website gives a few details but not much. I got the info from my RM at StanChart and KGI broker. StanChart, are a bookbuilder, and asked me to reply by 13 March (today), so the dates on BKK Bank 24-26 are for general public by subscription and may be a bit late in the day.

http://www.bangkokbank.com/BangkokBank/PersonalBanking/BuildYourWealth/InvestmentsAndDeposits/Pages/CPALLDebentures.aspx

Cheers

Fletch

[cheeryble]

Thanks Fletch yes probably a poor trade-in-ability just thru the bank.

That really IS a fixed term and ten years way too much for a 65yo.

May well get sold out too I wonder how they handle that here.

Something tells me it won't be sharing evenly among all subscribers as is sometimes done.

Edited March 13, 2014 by cheeryble

[BlackJack]

for some reason all the gold funds seem to be leading the charge

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

[fletchsmile]

Yes gold had a bad year last year down not far from 30% - so not a big surprise to see it bouncing back a bit.

The mining companies often fared worse. Particularly junior minors. I hold a few junior miners and most of them got hammered last year. So it was a case of hang on wait for the rebound and not panic sell. The miners have had a good run this year, and some of my best performing investments are mining funds, resource stocks etc. I still think there's further to go for them and there are still some attractive companies out there....

Cheers

Fletch

[BlackJack]

I read that indonesia is has attracted 17 trillion baht of overseas investor money for infrastructure anyone got any ideas on funds there

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[fletchsmile]

There are a couple of ETFs that invest in Indonesia:

EIDO from I-shares and IDX(?) from market vectors ehich if you have a brokerage acc that lets you trade US markets would be a cheap and easy route.

If you are looking for an active managed fund Scroders is a good name to google. (I used to work for Schroders a couple of decades back and Jakarta was one of my favourite places to visit from head office). They have various mutual funds or "reksa dana". Not sure how easy it is to buy onshore in Indo these days as a foreigner but you should be able to buy thru other outlets. Just be careful on the initial charges as although Indo office was reasonable brokers eleswhere may charge higher.

Aberdeen Singapore also do an Indonesia fund. I dont generally like buying funds thru Singapore tho as they often have high initial charges (5%) which unless you can get discounted via a promotion are not good value in my book

Cheers

Fletch

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[fletchsmile]

Was just reading a news clipping from one of the Thai newspapers.

UOB and TMB are launching an IPO for a USD High Yield Bond Fund on 9 May.

It s a feeder into AXA World Funds US High Yield Bond Fund.

Seems interesting. High Yield bonds are not always easy for retail investors to access in a sensible and efficient way particularly given the need for a portfolio.

Took a look at the underlying fund and looks interesting for someone into HYB and USD exposure that you can invest in from Thailand.

Nice to see the range of assets and funds available here growing too.

Min investment in the Thai feeder is THB 500K. 5 year returns on the underlying are 17% p.a. doubling your money.

This is distorted a bit by a 46% gain in 2009 as well as no doubt capital gains on falling interest rates. The 3 year annualised reurn of 9% (or lower) may be more realistic going forward.

Per investment policy Two thirds minimum is sub investment grade (below BBB- ) and a look at the fact sheet shows about 90%+ over a total of 300+ holdings. Nice diversification across issuers that just isn t feasible for retail investors

Think I will wait for more info from UOB and TMB on the actual Thai fund though rather than rush based on ehat I ve read on the underlying fund.

Hopefully access will still be possible to retail investors after that date but dont know.

Could be interesting also for those looking for dividend / coupon interest.

Cheers

Fletch

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Edited May 6, 2014 by fletchsmile

[Naam]

The 3 year annualised return of 9% (or lower) may be more realistic going forward.

a fair assumption. i hold a similar mix (only 20 bonds) with a current yield of 9.75%, range 6.50 - 13.00%

High Yield bonds are not always easy for retail investors to access in a sensible and efficient way particularly given the need for a portfolio.

especially because minimum tradeable batches are slowly shifting from $100k to 200k.

[fletchsmile]

The 3 year annualised return of 9% (or lower) may be more realistic going forward.

a fair assumption. i hold a similar mix (only 20 bonds) with a current yield of 9.75%, range 6.50 - 13.00%

High Yield bonds are not always easy for retail investors to access in a sensible and efficient way particularly given the need for a portfolio.

especially because minimum tradeable batches are slowly shifting from $100k to 200k.

cheers for the input.

We're still waiting for access to a Naam HYB fund BTW

Cheers

Fletch

[BlackJack]

wait on

UOB me thinks will have high fees as I had dealings with them before

some more reading http://news.alibaba.com/article/detail/news/100998571-1-thailand-investors%25E2%2580%2599-confidence-report-%25E2%2580%2593.html

[fletchsmile]

UOB/ ING Thailand have always seemed reasonable to me on fees. UOB Singapore is a different story.

I liked the following quote in the article... very true...

"Regardless, for long term investors who can embrace “Thai time,” and who are concerned with yearly rather than quarterly gains, Thailand does remain a destination of increasing returns, with its strength tipped towards being well positioned to grow its exports. Short term investors, however, may be affected by the effects of the protests upon quarterly equity prices and quarterly export number disappointments."

Quite surprised to hear Paul Gambles positive on Thailand though. Whenever I've talked to him in the past he's always been a perma bear on Thailand. Waiting for a pullback to buy cheaper...

Cheers

Fletch

[Naam]

The 3 year annualised return of 9% (or lower) may be more realistic going forward.

a fair assumption. i hold a similar mix (only 20 bonds) with a current yield of 9.75%, range 6.50 - 13.00%

High Yield bonds are not always easy for retail investors to access in a sensible and efficient way particularly given the need for a portfolio.

especially because minimum tradeable batches are slowly shifting from $100k to 200k.

cheers for the input.

We're still waiting for access to a Naam HYB fund BTW

Cheers

Fletch

HY funds are a dime a dozen. but whenever i checked one and went through the underlying my reaction was

[fletchsmile]

HY funds are a dime a dozen. but whenever i checked one and went through the underlying my reaction was

Fletch

Any thoughts on this I hold one:

http://www.hl.co.uk/funds/fund-news-and-investment-ideas/fund-news--and--alerts/kames-high-yield-bond-fund-research-update

http://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/k/kames-high-yield-bond-class-b-accumulation

http://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/k/kames-high-yield-bond-class-b-accumulation/fund-analysis

http://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/k/kames-high-yield-bond-class-b-accumulation/charts

As you know historically I prefer equities but have been acquiring more of an interest in fixed income in the last few years.

Reasonably satisfied with 118% over 5 years. Positive in all of last 5 years and above cash rates. Perf figures are distorted upwards by 2009 exceptional returns though

No entry fee and 0.75% p.a in charges.

[Naam]

HY funds are a dime a dozen. but whenever i checked one and went through the underlying my reaction was

Fletch

Any thoughts on this I hold one:

http://www.hl.co.uk/funds/fund-news-and-investment-ideas/fund-news--and--alerts/kames-high-yield-bond-fund-research-update

http://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/k/kames-high-yield-bond-class-b-accumulation

http://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/k/kames-high-yield-bond-class-b-accumulation/fund-analysis

http://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/k/kames-high-yield-bond-class-b-accumulation/charts

As you know historically I prefer equities but have been acquiring more of an interest in fixed income in the last few years.

Reasonably satisfied with 118% over 5 years. Positive in all of last 5 years and above cash rates. Perf figures are distorted upwards by 2009 exceptional returns though

No entry fee and 0.75% p.a in charges.

Kames class B;

Credit rating Weight (%) BBB 3.23% BB 38.50% B 43.13% CCC 7.26%

50% single B and CCC = risk unacceptable!

annual return may '09 > may '10 = 56.64% equivalent to the return a moderately intelligent German shepherd would have achieved.

sorry Fletch, doesn't rock my chair

[Naam]

my portfolio as of today:

BBB..........39%

BB............33%

B..............28%

cash quota not considered.

[fletchsmile]

Always knew your dog was intelligent Dr.Naam.

I knew from the numerous posts that it had taken your crystal ball for prediction purposes.

Didnt realise it had the capital to access HYB markets though.

Interesting point though that the dog achieved over 50% in 2009 and yet you re happy to lock in 9.75%

Perhaps you should be rocking the dog's chair

Cheers

Fletch

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Edited May 7, 2014 by fletchsmile

[fletchsmile]

my portfolio as of today:

BBB..........39%

BB............33%

B..............28%

cash quota not considered.

Just in the interests of full disclosure so I m not misleading anyone and as I wouldnt like Dr.Naam to be losing sleep worrying at his tender age

The bond fund mentioned above is the highest risk one I hold as HYB.

If I add in the other bond funds I hold the split is more like:

Aaa 7%

Aa 1%

A 5%

Bbb 28%

Bb 30%

B 25%

Ccc 4%

Kudos to the German shepherd though none of them beat it in 2009.

Quite clear who the alpha male is in the Naam household.

That s speaking of course about ability to add alpha to market returns rather than challenging a Klingon s manhood.

That said I m also happy with the average 5 year return of about 90% and even 24% over 3 years on the fixed income side of my portfolios. Particularly given the diversification and overall reduced volatility when combined with other asset classes.

Cheers

Fletch

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Edited May 7, 2014 by fletchsmile

[fletchsmile]

Was at an ASEAN Risk conference today.

One of the things that came up was that Singapore/Thailand/Malaysia are looking to bring out cross border mutual funds that could be marketed in 3 key markets Singapore/Thailand/Malaysia later this year.

We've already seen a widening in the ranges and types of funds available in Thailand in the last few years, including feeder funds into overseas funds, and greater range of asset classes, including on RMFs. So could add some more choices to investments from Thailand...

Cheers

Fletch

Edited May 15, 2014 by fletchsmile

[cheeryble]

Hi Fletch

Random thoughts on yr HYB Thai fund

1. Is this HYB to be paid in baht or could it come in directly from a foreign broker acct in $ you think (kinda don't expect you to know :-) )

2. Did you say the min was $100 k...that would be ok but wouldn't fancy too much more than that I think like Naam's $200k which is a trifle for him of course.whoops just checked r u saying it's $500k minimum and that's not sub divisible?

3. Did you find out yet how long this is open?

Thanks as always!

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Edited May 16, 2014 by cheeryble