Set Index And Thai Mutual Funds

[BlackJack]

Thinking about the Junta approving projects as fast as they can and infrastructure seems at the top of the pile

I see one from Bualuang

any others?

[Oorinara]

Have invested in TDEX, an ETF with top ranking by Morningstar (though 3 stars, still best ranked ETF in LOS), for several months. Good performance, but often difficult to trade (actually, buying only so far), say, 300k baht at once. Liquidity seems low or at least fluctuates, and sometime daily transaction is only 200+k baht. So trading consumes much time during working hours (interesting hobby though, if retired and amount properly managed).

Rather new to ETF in LOS, so wonder if I am just unlucky in timing or anyone having similar experiences.

Having UOB Smart Div., Aberdeen LTF and RMF, am considering replacing TDEX with conventional mutual funds or at least non-listed index funds.

[fletchsmile]

Have invested in TDEX, an ETF with top ranking by Morningstar (though 3 stars, still best ranked ETF in LOS), for several months. Good performance, but often difficult to trade (actually, buying only so far), say, 300k baht at once. Liquidity seems low or at least fluctuates, and sometime daily transaction is only 200+k baht. So trading consumes much time during working hours (interesting hobby though, if retired and amount properly managed).

Rather new to ETF in LOS, so wonder if I am just unlucky in timing or anyone having similar experiences.

Having UOB Smart Div., Aberdeen LTF and RMF, am considering replacing TDEX with conventional mutual funds or at least non-listed index funds.

For Thailand, I much prefer the better active managed funds to ETFs, and mentioned some reasons why earlier in this thread. Also similar reasons on this thread, post #36

http://www.thaivisa.com/forum/topic/756518-how-to-start-a-mutual-fund-for-absolute-beginners/page-2

Some of the Thai funds I own which I like are:

Aberdeen Long Term Equity Fund LTF

Aberdeen Smart Capital Retirement Fund RMF

Aberdeen Growth

The performance and make-up of these are similar. The LTF/RMF and normal status are the main diffs

UOB Good Corporate Governance LTF

UOB Thai Big Cap Div LTF (if you-re specifically looking for div payments - tho remember there can be a tax disadvantage to receiving divs for some people)

UOB Thai Equity Fund - just normal mutual fund

Krungrsri Dividend Stock LTF (similar comments to UOB Big Cap Div LTF) from BAY

Aberdeen Small Cap Fund and certain Bualuang funds are also worth a look, tho I don't hold them myself

Morning Star have a useful website for analysing funds. They will also help you sort by things like 10 yr performance for normal funds ("EQSET" on the drop down menu). For LTFs longest you'll see is 5 years ("LTF"), as they haven't quite been running to get the 10 years yet

You'll see the above fund management houses regularly top the tables and will be above the trackers/ETFs over 5 or 10 years.

Cheers

Fletch

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

[fletchsmile]

Thinking about the Junta approving projects as fast as they can and infrastructure seems at the top of the pile

I see one from Bualuang

any others?

If you're looking at funds for a particular theme in Thailand, one thing I learnt in the late 90's/2000 is they can be a bit narrow in Thailand, which can give a few problems:

- fund manager can't always find enough quality for that theme

- when things are going well and they're in fashion (or possibly juts before )fine. When not so good there's nowhere for them to run. I had this issue for Nakornthon Schroders Technology Fund (Nakornthon eventually becoming Aberdeen) in late 90's/ 2000

When technology was all the rage great, but when things got difficult the fund struggled as its mandate was too narrow.

- the fund can be too small to be efficient, particularly after pullbacks

In the end Nakornthon-Schroders just gave up the ghost as the fund became too small with not enough choice. The solution for me didn't end up as bad as it could though, as they gave unit holders the choice to receive cash or convert to Aberdeen Growth - which subsequently did well. Even their wind down later explained how the narrow focus had become an issue.

So if you want a fund, it may be better to look at say Asian infrastructure or global, which gives the manager more scope.

The other way to play it though if you want to be Thailand specific is to pick individual stocks. For that someone like KGI is useful for research. They have daily reseach, strategy, sector reports as well as themes. You'll need to search thru or check regularly though, below are examples but not infrastructure, eg:

http://www.kgieworld.co.th/en/research/daily-navigator.asp

http://www.kgieworld.co.th/en/research/stock-highlight.asp?page=1

http://research.kgieworld.co.th/recom.nsf/0/B942DCE2FEB1148A47257D3C0003F09B/$file/Daily+Story_Strategy_2014_08_22_e_th.pdf

Bear in mind also it's a sector that can be heavily influenced by politics. A lot of people were betting on Yingluck's lot adding a couple of trillion into the market. That then never happened. So here we are again months later and a similar theme...

BTW I checked on K-Mena fund mentioned before. I can't buy it thru StanChart who I buy most of my Thailand based funds from these days - so will give it a miss. I'll end up going with something offshore like maybe the investment trust AyG mentioned when adding to frontier markets exposure. iShares have an ETF, but is very narrow in focus. The basic premise of MENA makes sense tho' and K-Bank could be a convenient option for people buying from Thailand who don't want / can't easily buy offshore

Cheers

Fletch

Edited September 11, 2014 by fletchsmile

[BlackJack]

Morningstar has some infrastructure funds listed and list the top 5 hold ings

[fletchsmile]

For LTFs the tax reform has now been submitted to Ministry of Finance. So looks like the priveleges will indeed end in 2016.

RMFs will keep their tax priveleges tho'

Cheers

Fletch

[Oorinara]

Tks, Fletch. I also compared One Asset Management's active SET50 (mutual fund, Morningstar 5 star) and passive TDEX SET50 (ETF, 3 star), and found the former has outperformed the latter over several years.

[Oorinara]

Online trading of Mutual Fund - Nomura iFund

http://www.nomuradirect.com/en/product-service/omnibus-account.aspx

Anyone knows securities companies providing online trading of mutual funds (not ETF)? Nomura does as linked above, but wonder if any others (KGI and Kim Eng seem not)?

Asset Managements such as Aberdeen and One Asset provide online trading, but of their own funds only.

[AyG]

I also compared One Asset Management's active SET50 (mutual fund, Morningstar 5 star) and passive TDEX SET50 (ETF, 3 star), and found the former has outperformed the latter over several years.

What I find outrageous is the management fees on Thai-based ETFs. The TDEX fund isn't too bad at 0.4%/year. However, plenty of funds, including the KTAM SET50 ETF charge 1.5%, which is pretty steep even for an actively managed fund.

Full list of ETF fees at http://tools.morningstarthailand.com/th/etfquickrank/default.aspx?Site=TH&Universe=ETALL%24%24ALL&LanguageId=en-TH (last tab on the right above the data).

[Oorinara]

Tks, AyG. I've gone over many fund houses' site and info, and found that Nomura be seemingly the only broker providing online trading of funds of a few fund houses, from multiple asset managements.

[fletchsmile]

BOT (MPC) have kept the policy rate at 2% as expected.

So people looking for yield will continue to have to look elsewhere than cash. TINA = there is no alternative, as they say, you cant rely on cash for yield so need to consider "riskier" asset classes if you want decent returns.

Looks like 2015 at the earliest for any THB interest rate rise from MPC.

Cheers

Fletch

Edited September 17, 2014 by fletchsmile

[cheeryble]

Cash position is always best avoided if possible and is earning zero.....would love to be in the SET however I'm scared to enter the market at these (possibly) toppy levels.

What to do?

Die early so I don't run out?

Edited September 20, 2014 by cheeryble

[AyG]

Cash position is always best avoided if possible and is earning zero.....would love to be in the SET however I'm scared to enter the market at these (possibly) toppy levels.

What to do?

Die early so I don't run out?

Live fast, die young, and leave a good looking corpse.

On a more serious note, cash is every bit as much a valid asset class as bonds, equities and commodities.

There will be times when none of the other asset classes looks attractive and it's better to keep one's powder dry for when better opportunities arise.

[Naam]

Cash position is always best avoided if possible and is earning zero.....would love to be in the SET however I'm scared to enter the market at these (possibly) toppy levels.

What to do?

Die early so I don't run out?

i strongly disagree and could cite dozens of opportunities during the last several decades where cash was "king".

it goes without saying that holding cash at 0% one should be able to afford it.

[Naam]

Cash position is always best avoided if possible and is earning zero.....would love to be in the SET however I'm scared to enter the market at these (possibly) toppy levels.

What to do?

Die early so I don't run out?

Live fast, die young, and leave a good looking corpse.

On a more serious note, cash is every bit as much a valid asset class as bonds, equities and commodities.

There will be times when none of the other asset classes looks attractive and it's better to keep one's powder dry for when better opportunities arise.

[cheeryble]

Naam that looks like an Eton tie in your pic?

Edited September 20, 2014 by cheeryble

[Naam]

Naam that looks like an Eton tie in your pic?

Eton no have. but have MIT Boston tie where i did a part of my studies and where most of the time i lacked cash

[Oorinara]

I recently went to Capital Nomura Securities headquarters in Sathorn for account opening but just to find that they only accept Thai nationalities. I brought non-Thai/US passport and work permit but was denied.

I wanted to avail this iFund account for trading of multiple funds...

http://www.nomuradirect.com/en/product-service/omnibus-account.aspx

[fletchsmile]

I think it s the US factor. I checked with another friend who works at a Thai brokers that also offers access to overseas markets. They said it is difficult to do for US customers because of FATCA rules. Other foreigner nationalities were OK though.

Cheers

Fletch

[Oorinara]

Tks, Fletch, but I should have made it clear that my passport is neither Thai nor US. And I also don't have green card, Social Security number, US address and US account... Nomura says they don't accept any foreign nationals regardless of work permit.

[cheeryble]

Hmmm probably initiated by threat of US problems.

Things ain't the same since UBS started rolling over waving its legs in the air so

US regulators or IRS think they rule the world.....which in this case seems to be a self fulfilling prophecy.

(What's the world coming to when you can't trust a Swiss bank?)

Sent from my iPad using ThaiVisa app

Edited October 4, 2014 by cheeryble

[BlackJack]

All into cash now as 1 Ebola case in Thailand and the markets are toast along with all the projects for growth next year

[DavidMavec]

I was thinking of plunking a big chunk I have right now into my Aberdeen and UOB mutual funds... now might not be the best time, eh?

[BlackJack]

It's just my thoughts as I think correction is coming. Then jump back in for next year.

[fletchsmile]

Yes reasonable chance of a correction. The question is when and how big?

The Thai market looks a bit overvalued to me, on P/E of around 18 for the SET. Although earnings should start to pick up, so looking in isolation I wouldn't be so worried. Also Thailand missed out on a good year last year by shooting itself in the foot again.

What worries me more is the global factors. Only needs a trigger from somewhere.

US is particularly overvalued and due a big correction at some point. As I posted on another thread, I sold off quite a few US blue chips big names like MCD, Coca Cola, Goodyear, GE, and reduced AAPL, Intel, JPM etc. I'm not a fan of USD and with US equities above 20 on P/Es for the whole market or any other metric you care to mention with the US. I went thru and cut or reduced anything US with current and forecast P/E over 15, where the div was under 3%. Thailand doesn't look so bad in contrast, but if the US goes it will drag down others.

So for me, no I wouldn't be looking to time the Thai market. If I were looking to time it, I wouldn't choose now for a big lump sum important to me.

Investing long term, by baht cost averaging still acceptable to me tho'.

Will finish my LTF last of 10 installments this month. RMFs already done. So collecting tax relief won't go far wrong either and cushion any possible fall, as well as keep adding to the game in case there is no fall

Cheers

Fletch

[DavidMavec]

Thanks to the both of you for your comments, I guess I'll keep the chunk in a fixed deposit account for now and continue doing baht cost averaging with my mutual funds.

Edited October 16, 2014 by DavidMavec

[AyG]

Thanks to the both of you for your comments, I guess I'll keep the chunk in a fixed deposit account for now and continue doing baht cost averaging with my mutual funds.

You are aware that Baht cost averaging is utter bunkum?

See, for example, http://web.archive.org/web/20030319011045/http://gsbwww.uchicago.edu/fac/george.constantinides/JFQA_1979.pdf

Or, in simpler terms http://consumerist.com/2007/05/22/what-is-dollar-cost-averaging-and-why-is-it-bunk/

If you're investing for the longer term (5+ years) it's almost invariably better simply to invest now and ride out the ups and downs; attempting to time the market is pretty much impossible.

[BlackJack]

One case of Ebola here and things will turn quickly

[fletchsmile]

Thanks to the both of you for your comments, I guess I'll keep the chunk in a fixed deposit account for now and continue doing baht cost averaging with my mutual funds.

You are aware that Baht cost averaging is utter bunkum?

See, for example, http://web.archive.org/web/20030319011045/http://gsbwww.uchicago.edu/fac/george.constantinides/JFQA_1979.pdf

Or, in simpler terms http://consumerist.com/2007/05/22/what-is-dollar-cost-averaging-and-why-is-it-bunk/

If you're investing for the longer term (5+ years) it's almost invariably better simply to invest now and ride out the ups and downs; attempting to time the market is pretty much impossible.

Have to disagree with both of those links compared to Dave's case.

Link1 is comparing a starting point of a risk based asset and then selling half of it to buy a second risk based asset. They start from the premise of inheriting an asset such as shares in A or property A and when is the best time to sell half of those shares or property and invest in a second risk based asset of the same type B

This is very different than starting with cash (relatively risk free) and investing in a share (risky asset)

In Link1 case for me its intuitive do it all in one go. You will also get all your diversification benefits in one go reduce risk in one go and reduce transaction costs. So while I agree with their conclusion averaging out of risk A into risk B and obtaining diversification is different that going from no risk to more risk in Dave's case.

For link2 it looks only at return. Then for risk links back to link1.

Yes if you consider only returns the expected value of DCA will be lower. As investing longer given expected positive returns will be lower. i.e the longer youre invested the more money you make.

It s when you combine risk and return and look at volatilities and return combined DCA makes sense. i.e risk adjusted return considering worst case and best case scenarios.

I'd suggest doing the following:

Pick and 5 year period in the SET and download data from BOT and try yourself.

What you'll find is that if you pick a lump sum investment

1. The worst case scenario is worse for 1 lump sum for 5 years than the worst case scenario for 60 small investments each month

2. The best case scenario for 1 lump sum for 5 years is better than 60 small investments each month

3. The average return will be better for the lump sum where markets are positive and likely worse where negative.

I actually do this mysrlf from time to time and have posted results on threads

What you are recommending to Dave is he puts his lump sum in now as the expected return is higher. True. But the flaw in that is if he picks the worst time he seriously loses out.

If he does DCA he will miss the best case, avoid the worst case and statistically do a bit worse on average than a lump sum.

For me I wouldnt want to gamble on not hitting the worst case given where we are in time. I'd take a little lower return for less risk.

Cheers

Fletch

[fletchsmile]

Btw see post #8 near the start of this thread. That's one example using SET data...