Set Index And Thai Mutual Funds

[AyG]

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

If we're talking about a 5+ year scenario for investment, then I don't believe that picking the worst time is particularly significant. I'd be much more concerned about keeping a substantial portion of my money in a bank account losing money* for much of that time.

Markets over the past few days have taken a bit of a hammering, which to me suggests it might actually be a good time to invest if you've got a pile of cash, rather than sit on the sidelines. Markets might go lower, but in 5 years or more the dip will be a distant memory.

One of the most common mistakes for inexperienced investors is to follow the herd: invest when markets are booming, and disinvesting when they're falling. It's a sure fire recipe for poor performance.

* I disagree with your characterisation of money on deposit as "relatively risk free". I'd say that given the corrosive effect of inflation, it's definitely risk+. From choice I'd always prefer to invest in an asset which has a reasonable chance of giving a positive return after taking inflation into account. Cash simply does not do that.

[fletchsmile]

I hear your points.

Have a look at post #8 tho.

At that time using the historical data set: On 5 years there was a 12% chance of losing money over 5 years and 88% chance of making money. By DCA there was almost no chance of losing money. That s the trade off for a lower return for DCA.

What you are effectively saying is that statistically you are prepared to take a risk of a drop of say 42% in a period like the 5 years between Dec 2003 and Dec 2008 for a slightly higher average return. That s your call. Some people would rather have almost no chance of a loss and take a slightly lower average return. Also 12% of the time you will lose money over 5 years wherras a DCA investor won't but will get a lower average return.

BTW for 10 years your case is stronger and I would be more likely to tend towards lump sum in an average year. That s just me though.

Problem is I dont think we re in a low risk average type of environment. Yes markets have fallen but valuations still look high. So for me I d choose DCA now rather than lump sum. But if SET was around 20% or so lower I d be more comfortable with a lump sum.

* agree cash is not risk free which is why I used the word "relatively". It is risk +. 2.5% THB isn t being eroded that much at the moment though.

For my risk profile for new money and on a 5 year time horizon I am more concerned about the 12% risk of a loss (actually think it s higher now than 12%% but that s just judgement and opinion) than the risk of losing a few percent in real terms in cash over 5 years. Also that there s a real risk of being 42% down 5 years from now even if only small likelihood and I think that small risk isnt as small as usual

If you think the market correction is a buy go for it. I think there s more risk in catching falling knives at the moment given the state of world play and SET valuations. So prefer Dave s approach at this point in time.

On the other hand for Russia I agree with your philosophy. Not over valued, unloved, go against the herd and it has had a pull back.

Cheers

Fletch

Edited October 17, 2014 by fletchsmile

[fletchsmile]

Just on Russia:

I own IEER as an ETF, and did put a small lump sum in a couple of times this year. It's about 2/3's Russian. I couldn't find many decent ones that paid a div. This pays 3.7% to 3.8%. Although not quite the 4% I aim for if going for div paying equities, it's above the 3% where I seriously consider cutting.

http://www.bloomberg.com/quote/IEER:LN

http://www.ishares.c...apped-ucits-etf

I struggled to find one I really like + pure Russia + decent div. Here's a unit trust I also like but no div

http://www.hl.co.uk/...-c-accumulation

Some more, but I don't hold them

https://www.hl.co.uk..._list=CEHGINOPW

Interested if anyone has any other suggestions they like, as i can't seem to find exactly what I want in Russia?

Cheers

Fletch

[AyG]

Interested if anyone has any other suggestions they like, as i can't seem to find exactly what I want in Russia?

Have you considered the JP Morgan Russian Securities Investment Trust? A pure Russian play. Dividend yield 3.8%, currently trading at an 11% discount to NAV?

[AyG]

Incidentally, isn't this one of the markets where active management will really pay off? I don't invest in Russia, but if I did I'd definitely go "active", rather than ETF.

[BlackJack]

From reading a variety of media it now seems that when any story breaks it effects the markets

planned or not

bots make money on the upside and the down and mortals cannot work at that speed - hence these long term trading plans

When the USA farts the markets react - up or down and the likes of JP Morgan make a killing

Well the whole World seems to be full of gas at the moment and i think many countries want to fart but are scared to

But when it does start it will be like the scene from blazing saddles

What is happening is unsustainable, the financial World is sick and bloated. The time for a good fart is near.

Edited October 18, 2014 by BlackJack

[fletchsmile]

Seems interest in Russia has been picking up:

http://www.bloomberg.com/news/2014-10-28/russia-etf-swells-as-valuations-lure-bargain-hunters.html

http://www.bloomberg.com/news/2014-10-28/hedge-fund-bets-on-worst-industry-in-detested-country.html

Cheers

Fletch

[topt]

Seems interest in Russia has been picking up:

http://www.bloomberg.com/news/2014-10-28/russia-etf-swells-as-valuations-lure-bargain-hunters.html

http://www.bloomberg.com/news/2014-10-28/hedge-fund-bets-on-worst-industry-in-detested-country.html

Cheers

Fletch

Thanks Fletch. A number of "commentators" had been touting Russia as being cheap prior to the Ukraine and oil issues so I guess theoretically there is a potential big upside. The question still is how long is that going to take.

I have been in a Russian unit trust for quite a while and I have no plans to add to it (currently underwater )

[BlackJack]

how will the stopping of QA effect the markets?

thats the elephant in the room

[fletchsmile]

Seems interest in Russia has been picking up:

http://www.bloomberg.com/news/2014-10-28/russia-etf-swells-as-valuations-lure-bargain-hunters.html

http://www.bloomberg.com/news/2014-10-28/hedge-fund-bets-on-worst-industry-in-detested-country.html

Cheers

Fletch

Thanks Fletch. A number of "commentators" had been touting Russia as being cheap prior to the Ukraine and oil issues so I guess theoretically there is a potential big upside. The question still is how long is that going to take.

I have been in a Russian unit trust for quite a while and I have no plans to add to it (currently underwater )

Yes, think Russia could require some patience from us. Seems to have found a floor though for now. There's definitely value there, but as you say the big question is how long, which is far from easy to predict. I'm happy to just sit and hold, and as mentioned recently added more

Cheers

Fletch

[fletchsmile]

how will the stopping of QA effect the markets?

thats the elephant in the room

I think there's a lot of misinformation and misunderstanding out there on QE and its impacts. Another area the press doesn't help either.

For where we are at now:

- Remember the FED hasn't withdrawn all that liquidity it pumped into the system, it has only stopped pumping more in. For me that's a good thing, and hopefully markets can slowly get away from this artificial intervention and behave more normally

- Interest rates are still historically very low and will remain low for quite some time. Any increases will be only small. So people will still be forced to look to risk to generate decent returns.

For the impact of QE:

- I think it's only with hindsight people will realise the impact

- The 2 biggest things it added in my view were:

1) confidence (people believed the story the FED was actually doing something and would do whatever was needed, regardless of whether it actually works or not)

2) it added a lot of liquidity to the system. This was particularly important when the financial system lacked liquidity and financial institutions were afraid to lend, and had liquidity issues. Also some of the liquidity found its way one way or another into various asset classes

- It will be interesting to get some real picture of where the money went. I would think some into lending by banks and rebuilding their balance sheets, some into bonds, and some into equities. For me I think the equities would have been one of the smaller trickle downs. Very difficult to guess numbers, but I would be surprised if more than say 10% actually found its way into equity markets directly. The problem with adding liquidity is it all sloshes around in the system and has knock on effects elsewhere, multiplier effects etc, so its hard to pin down any exact impacts accurately.

Another thing to bear in mind is that where the FED did buy bonds, some of those it bought from have had time to rebuild their balance sheets, so themselves can now better contribute to credit extension and liquidity. If you think of the banks, while they are not necessarily all where they should be, they are much better placed today than a few years back to add credit and liquidity to the economies.

People often overlook that QE was creating digital liabilities to buy assets, so although the US balance sheet is now massive in gross terms, the net impact was much less

So all in all for me, I think the impact of stopping QE itself won't be so great. May just make confidence a little shaky for a while, until hopefully people realise stopping it was something about nothing. The worst risk is if something else blows up while people are still lacking confidence. For me stopping QE is a positive. Enough is enough...

How the west deals with its debt mountains is the bigger issue for me

Cheers

Fletch

Edit: Forgot to add, the Japanese are still at it, and the Europeans are starting to play their own version too...

Edited October 31, 2014 by fletchsmile

[AyG]

How the west deals with its debt mountains is the bigger issue for me

In one word: inflation.

To be honest, I'm rather surprised that it hasn't kicked in yet.

[fletchsmile]

Worth a read for those interested in Russia

http://email.angelnexus.com/hostedemail/email.htm?CID=23420665644&ch=0070BD1B7CE4159F92708C9E3F644672&h=b2325cd462b67a14a2efc0ae50b97b53&ei=soRVg4rsN

I've added some more Russia exposure by buying the JPM Russian Securities Investment Trust that AyG mentioned.

I'm sometimes a bit wary of investment trusts because of charges sometimes, plus also the way the unknown factor added by the premium/discount vs NAV swings. The discounts/ premiums can be a bit unpredictable. In this case there's a double digit discount already. No idea if and when that may ever close a bit or even get worse. I've seen these exist for years in the past. However, given it pays a dividend of 4.69% at the moment it's nice knowing that some of that dividend is because you're paying less than 90p to get a dividend on a full pound. (i.e the discount has helped lift the div yield)

Given it could be a long time before Russia's value is realised, I'll be quite happy with a 4%+ dividend yield meantime. It will mean I'm less worried about the short-medium term volatility and fluctuation in capital. I'm prepared to keep it long term while collecting 4%+ pa until the value gets realised some day

Cheers for that again AyG.

Fletch

[topt]

Worth a read for those interested in Russia

http://email.angelnexus.com/hostedemail/email.htm?CID=23420665644&ch=0070BD1B7CE4159F92708C9E3F644672&h=b2325cd462b67a14a2efc0ae50b97b53&ei=soRVg4rsN

I've added some more Russia exposure by buying the JPM Russian Securities Investment Trust that AyG mentioned.

I'm sometimes a bit wary of investment trusts because of charges sometimes, plus also the way the unknown factor added by the premium/discount vs NAV swings. The discounts/ premiums can be a bit unpredictable. In this case there's a double digit discount already. No idea if and when that may ever close a bit or even get worse. I've seen these exist for years in the past. However, given it pays a dividend of 4.69% at the moment it's nice knowing that some of that dividend is because you're paying less than 90p to get a dividend on a full pound. (i.e the discount has helped lift the div yield)

Given it could be a long time before Russia's value is realised, I'll be quite happy with a 4%+ dividend yield meantime. It will mean I'm less worried about the short-medium term volatility and fluctuation in capital. I'm prepared to keep it long term while collecting 4%+ pa until the value gets realised some day

Cheers for that again AyG.

Fletch

Fletch if the ruble keeps nose diving will that have an impact on the dividend or do they hedge at all?

[fletchsmile]

topt.

The dividend will depend on the income generated from the underlying investments/ companies in the fund. The more profit the companies make, the more income there is to be distributed and paid to shareholders including the investment trust, and the higher the dividends they pay out. As Investment trusts usually pay dividends out of the income from investment after expenses, so the more dividend income they receive the more they can pay holders of the investment trust shares

Exchange risk will impact in a few ways. Key ones include:

- Because the underlying companies are Russian and their values and profits will be largely measured in roubles/RUB, and dividend payouts based in RUB. Hence if you're a UK investor even though profits rise and the dividend rises, that may be worth less in GBP terms if the RUB weakens. So there is exchange risk there on how much profit/ dividends will be worth when converted into GBP

- Also the actual value of the companies will go up and down in RUB terms again affecting the value. When this is converted back into GBP there may be a capital gain or loss.

So bottom line is both the income pay out/ dividend received and value of the underlying companies are subject to exchange risk. So on a simple level weaker RUB means the dividends will ultimately be lower and capital losses too, all other things being equal. This is the part that is easier to assess. This is the one you and I would notice and be expected to be impacted more by.

However, it doesn't necessarily just end there though. The individual companies themselves may fair better or worse depending on the exchange rate, depending on their business. That one is hard to assess. eg a company may have USD revenue but RUB costs, in which case it would be happy with a weaker RUB. Some may have the opposite. Exporters may prefer a weak RUB to make their products sell more, whereas too strong a RUB can hit volumes and profits. Importers the opposite. Also the underlying companies themselves will take out hedges. Gazprom as an oil company for example will likely hedge oil prices quoted in USD and possibly also hedge currencies too.

Plus yes, the investment trust may be able to hedge currency exposures as part of its mandate well as use leverage.

All in all, not easy to assess the FX risks. Hence my view is trust in the fund manager to pick the right businesses and understand them, and hedge if allowed and appropriate. My part is to bear in mind the GBP/RUB rate may hurt the capital value and result in lower divs in GBP terms. However, holding for long term I expect the weak RUB at the moment to be temporary/short term/mid-term. Yes the risks are there.

Cheers

Fletch

Edited November 8, 2014 by fletchsmile

[very old man]

Hello Fletch

Thanks for the information about this thread i have been reading it and its great and will continue to do so.

I do not invest in Thai stocks and funds primarily because the tax basis and reporting requirements of my nationality.

I do invested in the large international ETF'S

thanks again , very old man

[AyG]

It seems there's been a U-turn on ending LTFs. According to one newspaper, the Finance Ministry has agreed to extend the tax privilege, but with some changes such as a 10 year minimum holding period (as opposed to the current 5).

[BlackJack]

In 10 years the world as we know it could end

[fletchsmile]

I'm quite a fan of Singapore REITs given:

- Decent yields - the ones I hold are around 6%+, which is nice in today's low yield environment

- Some potential for capital growth

- Stable country, well regulated, and transparent

- Decent currency SGD - Asian and more stable than THB although correlated

- Diversification across asset classes - I'm still heavily weighted to equities

- Much more liquid than buying actual property in case you want to get out, and easier to buy in smaller denominations than a physical property

- No hassle ownership compared to physical property

- Tax efficient

So a couple of articles below

1) http://www.theedgemarkets.com/sg/article/oue-hospitality-trust-upgraded-%E2%80%9Cbuy%E2%80%9D-osk-dmg

OUE:SP Looks an interesting investment. Per Bloomberg 7.2% yield (nice), P/E just over 15, and price/book around 1 - both reasonable. Think I'll dip my toes into that one tomorrow

2) http://www.theedgemarkets.com/sg/article/sell-reit-buy-banks-developers-and-hoteliers-2015-says-cimb

They're not without risks though

CIMB's view for Singapore next year is:

Sell REITs but buy banks, property developers and hotel operators. Exporters that generate revenue in US dollars are a good catch too.

A key factor is that in a rising interest rate they believe REITs won't fair well. That's a risk to be born in mind.

For me I'm not so worried about it, as:

- CIMB are looking more as a trading view. I'm looking just as a buy and hold investment

- SGD rates are very low, and although they might rise it won't be at a great pace

- I'm quite happy with 6% - 7% yields. The primary objective for me is generating income from them, and I'm less worried about capital ups and downs. The ones I hold tend to be around 90 cents on the dollar anyway in terms of price to book. So am happy to lock-in around these levels (even tho distributions not guaranteed, I'd be happy with 6-7% on my original investment for years to come and no plans to sell - preferable to annuities at my age)

- I'm still actually quite low on property exposure and would like more. This is historic more than anything

- I already have quite a lot of exposure to the sectors they mention, so an important factor to remember is what you're starting point is. (For me I'm already well stocked on what they recommend and not as much REITs as I'd like). I hold 2 CIMB ETFs: CIMBDVD:SP and ASEANS: SP, both of these have high weightings to things like Sinagporean banks alreay

So might be of interest to some, particularly income seekers. Bear in mind some of the risks highlighted in the article and above though as capital isn't guaranteed.

Others I still hold ART, FCT and FCOT for similar reasons.

I've looked at Thai REITS from time to time, but all things considered, prefer Singapore. Much more transparent as well.

Cheers

Fletch

Edited December 2, 2014 by fletchsmile

[fletchsmile]

Bought a small amount of OUEHP:SP today to see how it goes. There are 3 similar tickers OUE:SP and OUECT:SP so need to be careful. Also Singapore exchange uses its own tickers, so had to look it up separately as usual, and the OUEHT one is SK7. It took a while to process/match the order, so maybe not that liquid - not that worried though as I see it as a long term hold. The REITs main interests are the Mandarin Orrchard, Mandarin Gallery, and Crown Plaza Chiangi hotel.

On a totally different subjective and with different objectives

I have to say the junior oil and gas sector looks interesting. It's been carnage, and the sell off has been indiscriminate, with the oil price tanking. So if I get time I want to dig around a bit more there, although we're off to Kanchanaburi for a long weekend so the plan is just family time and not sure if we even have internet

2 shale oil producers I held until recently were KOG and TPLM, which are left looking cheap:

- KOG I sold the last in July at $15, and completely exited. Basically profit taking and general worries on US, including market being overvalued. Plus it was the subject of a takeover so I viewed it had peaked as well. It's now under $7 a share

- TPLM Hasn't been quite as kind. I'd sold 2/3 s at various levels between $11.60 and $8.60 between June and October, so that my holdings is only 1/3 what it was - no-one ever became poor by taking profits as they say. Just thought I'd hang in there a bit longer with the last 1/3 - bad move!. Overall I'm still in profit, unless it drops below $3, but I have to say it was a bit of a shock watching that remaining 1/3 tank to just under $4 - that's less than half what it was 6 weeks ago. The business itself hasn't changed just the carnage from the price on its revenue side from the oil price.

I held them for speculative growth stories completely opposite of income producing REITs. Both look cheap now, but with oil at the price it is, cheap doesn't necessarily = good value A good reminder that if a stock halves in price, that doesn't mean it's twice as valuable as it was.

Key for both will be going back and revisiting what their production costs are, and where their break evens are The historic P/Es look pretty meaningless at the moment, and although they were increasing capacity that may no longer happen.

The article below from Investor place was interesting food for thought on the oil subject. It shows profitable oil price levels for 5 stocks - 5 stocks to buy at different oil prices

http://investorplace.com/2014/12/energy-stocks-oil-prices/view-all/#.VH8L-zGUe0c

It was also food for thought to read it alongside another article from the same sources, on 3 energy stocks to sell:

http://investorplace.com/2014/12/apache-apa-dawson-geophysical-dwsn-contango-oil-gas-mcf-energy-stocks/view-all/#.VH8M2TGUe0c

Oil and gas isn't really my speciality to be honest, but the carnage looks like it could provide some interesting opportunities (and pitfalls) for the very brave. Definitely one you need to research if you want to speculate. Am watching to see how TPLM and KOG stack up too.

Cheers

Fletch

Edited December 3, 2014 by fletchsmile

[fletchsmile]

Africa Oil (AOI:CN) was another stock I did very well with that looks cheap now. I sold around 75% of my holding - as a multibagger - and left some of the profit riding. That's also tanked from over CAD$ 10 a share when I sold some in October 2012 to around a quarter of that now CAD$ 2.60-ish.

It still has potentially one of the biggest oil areas and growth stories in Africa, and doesn't actually produce yet, just some nice discoveries. The Kenyan government hasn't helped with its politics and budget taxes in recent times, and the crude price obviously battered it further.

So given it looks cheap now, compared to where I sold a lot off, I've also been wondering whether to add to this again as well.

So if anyone out there has an O&G expertise combined with using that for actually investing/trading/speculating in/on shares, would welcome the input

Cheers

Fletch

Edited December 3, 2014 by fletchsmile

[Cheesekraft]

how would one go about investing in these index funds in Thailand? Would a work permit be required, or just a bank account? Is it easy to keep depositing monthly? thank you!

[fletchsmile]

how would one go about investing in these index funds in Thailand? Would a work permit be required, or just a bank account? Is it easy to keep depositing monthly? thank you!

To invest in mutual funds/unit trusts in Thailand you can do 1) directly with the fund management house or 2) through your bank.

1) e.g. Direct Aberdeen Fund Management or UOB Fund Management. Addresses forms etc are on their websites

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

http://www.uobam.co.th/sv_download/en

2) via a bank they will often tend to sell mainly their own funds. Two of the widest range are Standard Chartered (Tha) and TMB - they both cover Aberdeen and other fund management houses

Usually you will need a long term (non-immigration) visa, eg retirement, business, spouse, rather than just a tourist visa or stamp at the airport.

Certain nationalities, eg Americans in particular can have difficulties open new accounts with some providers

Please note you're not "depositing" money, but investing, and capital is not guaranteed like a deposit is. You can either fill in forms each month as and when you fell like it. TMB have an automated process for doing each month. If buying direct from the fund management house once ou're set up, you can do easily online. Stan Chart (thai) bank don't offer online

Cheers

Fletch

[fletchsmile]

Krungrsri Asset Management have just launched a new fund which feeds into the JPM Global Income Fund, which is the master fund.

This looks an interesting addition to the market of funds available in Thailand, as it pays out monthly income, which isn't that common for unit trusts/mutual funds in Thailand. Bloomberg describes it:

"JPMorgan Global Income Fund is an open-end investment fund incorporated in Luxembourg. The Fund's objective is to provide income by investing primarily in high yield corporate bonds and equities, as well as emerging market bonds, investment grade bonds, real estate investment trusts and convertibles".

http://www.bloomberg.com/quote/JPGIAHD:LX

KSAM' link is

http://www.krungsriasset.com/en/content.html?url=listfund.html

and the global JPM link is

http://www.jpmorganassetmanagement.lu/en/showpage.aspx?pageid=44&FundID=6175&ShareclassID=7399

The monthly yield is about 0.36% per month or 4.4% annualised.

Seems to have a one-off 1.5% front-end fee (bit higher than average for Thailand), and the ongoing other fees: management+trustee+register+custody come to under 0.9% p.a. (reasonable)

You need to be a non-retail or high net worth (HNWI) investor to buy, and minimum purchase is THB 500,000

It may be of interest to those seeking income prepared to take risk with their capital, tolerating short/medium term volatility and with a long term view. 4.4% paid monthly is a decent yield, and the fees aren't too bad for Thailand. The spread across various asset classes may make it a useful core holding for some. For those able to access or preferring to access funds outside Thailand there may well be cheaper ways to access, but on the other hand for someone Thailand based, it would be convenient and relatively hassle free.

It's also the type of thing I'd consider putting in my Thai wife's name - who knows very little about investments - and she could just hold, collecting income without needing to do anything. Plus if anything happened to me, she could do far worse than just keep it and keep collecting the income, again without needing to do anything, with potential for capital gains to counter inflation.

Cheers

Fletch

[AyG]

This looks an interesting addition to the market of funds available in Thailand, as it pays out monthly income, which isn't that common for unit trusts/mutual funds in Thailand.

Are you sure about that? The Krung Sri AM site says "Dividend Policy: None", and the master fund only pays dividends quarterly.

[DavidMavec]

"Usually you will need a long term (non-immigration) visa, eg retirement, business, spouse, rather than just a tourist visa or stamp at the airport."

To add to fletchsmile's helpful information, on just a tourist visa I have been able to open an Aberdeen mutual fund account going through Asia Plus Securities and a UOB mutual fund account at a branch directly on a 30 day stamp.

[fletchsmile]

This looks an interesting addition to the market of funds available in Thailand, as it pays out monthly income, which isn't that common for unit trusts/mutual funds in Thailand.

Are you sure about that? The Krung Sri AM site says "Dividend Policy: None", and the master fund only pays dividends quarterly.

- The master fund version has several classes in various currencies, some which pay dividends (or not if you go for accumulation units) at different intervals. Bloomberg lists as monthly, although there are also other intervals.

- For the Thai Krungsri feeder, I believe the way they will do it is via auto-redemption of units, rather than a dividend payment. If you click on Krungsri's lnk

http://www.krungsriasset.com/en/content.html?url=listfund.html

Then on the "KF-Income Seling Kits.pdf" download at the following link

http://www.krungsriasset.com/EN/pdf/Summary_KF-INCOME_fund_EN.pdf

Then:

- Page 14 shows a schedule of monthly income distributions based on a USD (hedged) monthly distribution class

- Page 24 says the Krungsri fund is designed to provide "regular income payments"

- Page 25 says Auto-switchging can be done: "Not more than 12 times a year by automatic redemption of KF-INCOME units and switching to KF-CASH"

On the fact sheet it under dividend policy it says "no" as you mention. But it also mentions automatic redemption up to 12 times per year again. I believe this is how they will use it to generate regular income by auto-redemption of units and switching into a cash fund, which could then be cashed. Hence you could create your own "regular income levels"

If you note the minimum redemption amount is THB 2,000. Multiplied by 12 this would be THB 24k a year and approximate the dividend yield on the minimum purchase amount.

I suspect the reason it is done this way is for tax. Dividends on mutual funds attract an election by you of either 1) flat rate of 10% deducted at source or 2) no tax deducted at source but then taxed at your marginal rate of tax.

By structuring it as above, I believe it could be treated as a capital gain rather than income. Hence no tax. This would also fit with making it available only to accredited investors. From a fund perspective also they wouldn't want to bother with this structure for small amounts, as the admin wouldn't be worth it. Hence the THB 500k minimum

So no div, but regularly income via auto-redemption up to 12x per year

Cheers

Fletch

[Cheesekraft]

"Usually you will need a long term (non-immigration) visa, eg retirement, business, spouse, rather than just a tourist visa or stamp at the airport."

To add to fletchsmile's helpful information, on just a tourist visa I have been able to open an Aberdeen mutual fund account going through Asia Plus Securities and a UOB mutual fund account at a branch directly on a 30 day stamp.

obviously this is not a question that can get a realistic answer, but perhaps an approximation: what kind of annual return on average would you expect from this fund over the long term?

[fletchsmile]

"Usually you will need a long term (non-immigration) visa, eg retirement, business, spouse, rather than just a tourist visa or stamp at the airport."

To add to fletchsmile's helpful information, on just a tourist visa I have been able to open an Aberdeen mutual fund account going through Asia Plus Securities and a UOB mutual fund account at a branch directly on a 30 day stamp.

obviously this is not a question that can get a realistic answer, but perhaps an approximation: what kind of annual return on average would you expect from this fund over the long term?

Not sure which fund you are referring to. If I took a good Thai equity mutual fund like Aberdeen Growth, here are my actual returns:

I have a weighted average purchase date of July 2001. (I started buying late '90 s post Asian crisis and bought over a couple of years or so)

> Total cumulative return is around +1,023%

> Average annualised return is just under 20% p.a. (about +19.6% p.a.)

> 10 year total return to Nov was around +350%

> 5 year total return to Nov was around +190%

>Year by year discrete returns are:

2014: (11m to Nov) 22%

2013: -3%

2012: 53%

2011: 9%

2010: 44%

2009: 56%

2008: -40% (Yes I suffered this year )

2007: 16%

2006: 13%

2005: 26%

2004: -4%

2003: 100%

2002: 48%

2001: 25%

So you can see highly volatile and not capital guaranteed over any single year. So if buying to invest you should be looking 5 years+ holding period

All the above numbers just give some perspective. Past performance is also no guarantee of the future. In particular:

> Growth rates for Thailand and its economy in previous years of the millenium were much higher as the country developed. We're now in a period of slower growth.

> A certain element of past returns listed above is also perhaps recovery from the 1997 crisis, so 20% annualised would be an unrealistic expectation going forward

Looking forward

> I budget for returns of around 7% p.a. from Thai equities going forward on average. I do expect it to be higher (late single digits%, early double digits%) than that, but budget for lower just in case. I don't bank on it though. 20% is unrealistic and too high

> From another perspective, once I start drawing regularly on the investments, I expect to be able to take out 4% a year on average and my capital then to at least keep pace with inflation. (Note: I would smooth take outs by taking more in cash in good years and not taking out in bad years)

> I'm also mindful that in an extreme year = stress year or very good year that could vary +/- 50%either way (i.e -40% to +60% in a single year ball park), and Thai equities will definitely will not be a smooth ride.

So as you say not an easy question to answer, and those are just my views

Cheers Fletch

Edited December 12, 2014 by fletchsmile

[AyG]

The 10 year annualised performance is 16.1%, which is a better guide than "since inception" since it covers (roughly) an economic cycle and avoids the distortion of "double counting" part of that cycle.

This level of performance is associated with a very significant level of risk. The fund itself is categorised by Morningstar Thailand as "Equity Small/Mid-Cap" and as such should be sufficient warning that this is not a fund for widows and orphans, though it may have a role as relatively small part of a diversified portfolio.

Personally I prefer to access Aberdeen's expertise in the Thai market through the Aberdeen New Thai Investment Trust. It's a closed-ended structure, which typically produces better performance than open ended funds. It can also use gearing to improve performance (though gearing has historically been modest, and currently stands at roughly 2%). And it's trading at a discount to NAV of roughly 12%. It's also got a more favourable fee structure.

Fact sheet at http://www.newthai-trust.co.uk/doc.nsf/Lit/FactsheetUKClosedNewThai