Getting better dividends than fixed deposit accounts in Thailand

[fletchsmile]

Fletch, based upon alleykat's description, the fund he's invested in is almost certainly http://www.kasikornasset.com/EN/BannerPromotion/Pages/KEFF6M.aspx

I didn't post anything before because I couldn't find anything nice to say about the fund, apart from the fact that the currency risk appears to be hedged.

Yes, you're right AyG.

It's a new fund IPO. Hard to say anything nice about it, except for the bank/KAM who will earn a nice share of the 20bp fee without even having to use their own balance sheet

To really understand what all the risks are would take some time to study the information and the prospectus. I doubt alleykat's wife was provided with anywhere near the understanding she should have been.

At a high level, and just reading the notes and summary, it's not something I'd want to put my own money in either without reading and understanding a lot more.

Even then I'm pretty sure my conclusion would be for the sake of 0.3% per annum I get over my THB e-saver deposit and many other decent Thai bank special savings bank accounts, which are capital guaranteed under the Thai DPA and no FX risk etc etc it's not worth it. I'd probably go as far as saying for an extra 0.3% it's not evening worth reading the prospectus, and time to understand the risks.

Particularly as there's the risk: "the investor may receive less than the initial investment amount"

IF it performs as estimated @ 3% p.a that's 1.5% on 2mio (over 6 months) = THB 30,000. A simple deposit at 2.7%p.a would be 1.35% or THB 27,000 over the same 6 month period. For the sake of an extra THB 3,000 over 6 months it really isn't worth putting THB 2mio at risk (or should I say betting your house ). Perhaps OK for a HNWI with stacks of money makes sense, might even be OK for other categories if they took the time to read and fully understand, but I doubt in the case of alleykat's wife who went in for a savings account came out with this and wasn't sure why...

I guess the positive is that if it is still at an IPO stage, that means that it has not fully launched yet and still at the offer stage. That should significantly increase the chances of getting your money back and saying now you understand it's not worth the risk.

Cheers

Fletch

Edited May 8, 2014 by fletchsmile

[alleykat]

Fletchsmile, I' m not in Thailand so I can't go with her back to the bank. I have told her to go back today and to talk to a different staff member, and explain that the fund wasn't fully explained to her, and to try and have it changed to a regular fixed-term deposit.

She got a surprise when I told her that she was not guaranteed to get even her principle amount back. I'm fairly sure she was railroaded into it, and was led to believe it was some kind of term deposit.

I'm as mad as hell about this.

Edited May 8, 2014 by alleykat

[alleykat]

Hey Fletchsmile, it appears that everything may be okay. My wife has just been back to her KBank branch this morning, and apparently she's managed to pull out of the Fund, but she won't get her money back until Monday.

I was quite concerned because some of the staff at her branch are normally quite militant, others are incompetent and lazy, and my wife doesn't stand up to them. Years ago she was told that she couldn't set up an automatic payment, another time was told that that we couldn't see one of her bank accounts online. It wasn't until I went in with her later on, and talked to someone higher up, that we were able to get these things done.

What happened yesterday is another example of their tardiness. My wife wasn't given or even shown a prospectus, she just went into the branch and said she wanted to deposit the money for 6 months ( meaning fixed term deposit) and was shown to a desk and ended up putting her hard-earned money into something she didn't even know anything about. For sure, some of the blame must lie with her also for not researching it properly. But she claims the woman at the bank told her it was a guaranteed investment, lol.

Google; keff 6mu

Probably now the fund will do really well, lol, but I didn't want the stress of waiting it out for 6 months.

[fletchsmile]

That s good news alleykat.

I was expecting that as a new launch IPO it would be easier to get money back as the offer period hasnt closed yet and the fund not started trading.

There was enough in the 1 pager AyG posted to make me turn it down. If you clicked on the fund profile link and looked at the listed major risks it really wouldnt be worth it to me taking those over a depisit acc for 3000 baht extra on 2mio.

It may well have turned out ok but there s risks for me not compensated by the return.

To give an idea on the stats side for credit grades the 5 underlyings have a probability of default over 1 year of around 0.1 to 0.2 % each. Extremely unlikely you d lose all your capital and all 5 default at the same time. I dont like 2 in 5 being in Turkey though as they correlate for risk.

Ball park very crude estimate as an idea about one in a thousand chance of 20%-25% of your portfolio going into default.

So youd have to be unlucky. But really not worth it for THB 3k extra.

Risk of returns being lower than 3% and therefore lower than cash obviously much higher than one in a thousand.

BTW The risks of it doing really well and you missing out are also very low.

Raises some big trust issues about your bank or at least certain people in certain branches. The whole thing is not right on so many levels...

Cheers

Fletch

Sent from my GT-I9152 using Thaivisa Connect Thailand mobile app

Edited May 9, 2014 by fletchsmile

[alleykat]

I make 3% pa of 2,300,000 over 6 months to be 34,500 baht as opposed to 19,550 baht with the 1.7% pa.

The spelling mistake on the website banner was another put off for me, 'Frist'' instead of 'First'.

[fletchsmile]

I make 3% pa of 2,300,000 over 6 months to be 34,500 baht as opposed to 19,550 baht with the 1.7% pa.

The spelling mistake on the website banner was another put off for me, 'Frist'' instead of 'First'.

Yes your numbers stack up.

she should be able to improve quite a bit on only 1.7%. 2.5% to 3 % should be in reach on that money. Take a look on the bank interest rate thread.

Last couple of weeks or so some possibilities:

Kbank 8M 2.25%

KTB 10M 2.6%

CIMB 9M 2.8%

TMB No Fixed / ME acc 3%

Stan Chart ESaver 2.7% online. Instant online access no tenor.

Stan Chart Marathon 2.5% Step up rates so the 2.5% is average. Can withdraw up to 2 times a month during the 6m term

Cheers

Fletch

Sent from my GT-I9152 using Thaivisa Connect Thailand mobile app

[fletchsmile]

Hey Fletchsmile, it appears that everything may be okay. My wife has just been back to her KBank branch this morning, and apparently she's managed to pull out of the Fund, but she won't get her money back until Monday.

I was quite concerned because some of the staff at her branch are normally quite militant, others are incompetent and lazy, and my wife doesn't stand up to them. Years ago she was told that she couldn't set up an automatic payment, another time was told that that we couldn't see one of her bank accounts online. It wasn't until I went in with her later on, and talked to someone higher up, that we were able to get these things done.

What happened yesterday is another example of their tardiness. My wife wasn't given or even shown a prospectus, she just went into the branch and said she wanted to deposit the money for 6 months ( meaning fixed term deposit) and was shown to a desk and ended up putting her hard-earned money into something she didn't even know anything about. For sure, some of the blame must lie with her also for not researching it properly. But she claims the woman at the bank told her it was a guaranteed investment, lol.

Google; keff 6mu

Probably now the fund will do really well, lol, but I didn't want the stress of waiting it out for 6 months.

Just in case you felt you were missing out and changed your mind....

Here's a similar one from Krungrsri with IPO until 19 May

http://www.krungsriasset.com/EN/pdf/FFS_KFFIX6M93_EN.pdf

Seems to be fashionable at the moment.

The risk profile on this one is better - higher credit grades and more diversification, but the yield is a bit lower. Still not my cup of tea though, and not worth the hassle compared to picking the right bank accounts

Cheers

fletch

[uhhh ohhh]

You're young at 33 and have many years to invest. There are some good responses here but I'd have to ask you why you want to limit yourself to Thailand? I was lucky with mutual funds because Peter Lynch (Magellan Fund) invested my monies back in the 80's. I eventually moved away from mutual funds and invest myself now in low P/E stocks with a long string of years paying dividends of at least 2.5% up to 8%. I also read a few books on investing which helped me and I've become more comfortable making my own individual stock investments. If you don't want to do it yourself, look for a good fund manager with a proven track record in a no-load or low-load fund. I've also looked at the top 10 holdings of some very successful funds to pick some stocks. Do your DD.

[beno69]

I think it's not really dangerous - because only for a have year..

They have many of this FONDS: KEFF6Mxx

http://www.kasikornasset.com/EN/FundDocuments/Monthly%20Report/KEFF6MS.pdf

Interest about 3%

[AyG]

I think it's not really dangerous - because only for a have year..

They have many of this FONDS: KEFF6Mxx

http://www.kasikornasset.com/EN/FundDocuments/Monthly%20Report/KEFF6MS.pdf

Interest about 3%

I can't agree with your conclusion of "not really dangerous". This fund invests 90% of its money with four banks:

Agriculture Bank of China

Turkiye Vakiflar Bankasi Tao (Turkey)

Permata Bank (Indonesia)

Akbank (Turkey)

This is a very concentrated investment with some less than stellar institutions in dodgy countries. With a return of only 3%, then the investor is simply not being compensated for the risk entailed.

[ExpatJ]

You can also cut out the middleman and his fees by opening a brokerage account and buying high yield stocks like AIS, DTAC, Supalai. Lumpini, Kiatnakin Phatra etc for yourself.

Thanks... have you kept money in these stocks in the long term? Or more traded these stocks in the short term?

You could try a dividend play (i do this if i have time most years), buy those high dividend Thai stocks about a month before the dividend XD date, then normally what happens is that in the final month investors buy the stock in the lead up to XD because of its high dividend and the price goes up. Plan A-You can then sell the day before the XD date taking a nice profit, or Plan B if the price hasnt increased much, just take the dividend and hold on for a few days/weeks/months till the price recovers. Plan B works better if you choose 'blue chip' thai stocks - AIS for example. Works for me.

[Arkady]

You can also cut out the middleman and his fees by opening a brokerage account and buying high yield stocks like AIS, DTAC, Supalai. Lumpini, Kiatnakin Phatra etc for yourself.

Thanks... have you kept money in these stocks in the long term? Or more traded these stocks in the short term?

You could try a dividend play (i do this if i have time most years), buy those high dividend Thai stocks about a month before the dividend XD date, then normally what happens is that in the final month investors buy the stock in the lead up to XD because of its high dividend and the price goes up. Plan A-You can then sell the day before the XD date taking a nice profit, or Plan B if the price hasnt increased much, just take the dividend and hold on for a few days/weeks/months till the price recovers. Plan B works better if you choose 'blue chip' thai stocks - AIS for example. Works for me.

Yes. Retailers are even more prone to chase up the high yielders that pay only once a year. Once did a study on. efficiency of Thai stocks correcting down by the amount of the div on XD day. Concluded that it depended on market direction on XD day.

Always remember to take into account the 10% withholding tax on divs.

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[infinity11]

I did not read all of the posts but i would add to the title for retirement purposes, 800k that is acceptable to immigartion in jomtien for retirement visa renewal.

So far the fixed deposit IS.

Though i DO wonder have safe it is or how safe money is in thai banks or any bank for that matter.

(come a run or bank failure etc...)