Autoredemption Funds

[AyG]

Can anyone explain to me how one can buy Bangkok Bank's autoredemption funds (http://www.bangkokbank.com/bangkokbank/personalbanking/buildyourwealth/mutualfunds/autoredemption/Pages/Default.aspx) - apart from the opening of a mutual fund account with Bangkok Bank bit.

They look attractive because (a) the gains appear to be treated as capital gains, rather than income, so isn't taxed locally, and ( they offer a higher return than comparable fixed deposit accounts.

The bit that confuses me is "Subscriptions available during IPO period only".

Are they offered regularly? If so, when?

And is there any information available about how they have performed in practice? They don't even seem to be mentioned on the BBAML website.

Thanks.

[fletchsmile]

AyG

Because they are for a specified period of time, they only allow subscriptions up to a certain date. After that date the fund is closed to new subscriptions. It's basically done to batch together people in the same specified period.

Rather than have 1000 investors all start on different dates for say a period of 1 year, which would all have different end dates, they batch those 1000 investors together to all start on say 31 August and all end on 31 August next year. In order to build the book they have a subscription or offer period to build up the critical mass.

Bit like an IPO on a share where applications are accepted up to a certain date. People apply on all different dates up to the end of the subscription period. After that everyone's shares start trading on the same day. Similar concept but with investment funds.

If they prove popular asset managers keep offering them on a regular basis based on expected demand. Certain products are fashionable so they do more of them. Certain fall from favour or the manager views as not right for investment. If the investment makes sense its common for the fund manager to offer a new subscription when they know the old ones are maturing. But there's no obligation to do so.

Cheers

Fletch

[fletchsmile]

For performance, what you could do is look up similar funds via Morning Star

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

Select all funds for BBL Asset Management (there are 63 listed). The problem is it only shows live funds. What you can do though is look for those close to maturity or see how it has done since inception. They usually start at NAV = 10. So for the example below, it had been running 5 months or so and is now worth 10.13 so 1.3% return since inception.

http://tools.morningstarthailand.com/4j1cmnvbju/snapshot/snapshot.aspx?id=F00000PMOH&SecurityToken=F00000PMOH]2]0]FOTHA$$ONS&ClientFund=0&LanguageId=en-TH&CurrencyId=THB&UniverseId=FOTHA$$ONS&BaseCurrencyId=THB

Generally if they are based on fixed income particularly gov/sovereign I don't see them generating much income above cash rates, as gov yields aren't much above cash for these time periods, and then fees are deducted. Where it could gain significantly though is in a falling yield/ rising bond price environment. In my view the scope for interest rates decreasing significantly and therefore yield on bonds falling and therefore capital gains is low at the moment

Cheers

Fletch

[AyG]

Thanks, Fletch for two really helpful replies.

As far as I can see, Bangkok Bank is not currently offering these funds. There's absolutely no mention of them on the BBL AM website that I can see.

I guess for now I'll just be sticking with fixed term deposit accounts and paying the income tax.

[aurelius]

You can buy them from internet banking; select the 'investment' menu tab.