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DARANA CHUDASRI
ING Funds (Thailand) yesterday launched its new oil-linked fund offering returns from zero to 10% per year.
The ING Thai WTI Oil Linked Fund will invest in Australian dollar denominated notes linked to West Texas Intermediate crude oil prices quoted on the New York Mercantile Exchange.
Maris Tarab, president of ING Funds (Thailand), said investors would have their investment principal fully protected under the fund. Returns for the structured notes will be linked to crude oil prices, with a maximum gain of 10%.
He said ING chose the Nymex WTI contract as the benchmark for the fund considering its high liquidity, accounting for as much as half of the total global market futures trade.
The 25-month fund has an auto-redemption feature every six months. If Nymex WTI contracts rise by 6% or more from the initial investment date, the issuer of the structured note will repay principal and a 10% return for investors.
Investors will receive 105% of principal investment if the fund is recalled in the sixth month, 110% if after 12 months, 115% after 18 months and 120% of principal after 24 months.
If WTI contracts at maturity fail to reach the 6% target, then investors will receive zero returns at maturity.
The fund will pay in Australian dollars with no currency hedge. Mr Maris said fund holders will be open to currency risk, although the dollar has potential to appreciate further given the strength of the Australian economy.
Since the beginning of the year, the Australian dollar has gained 10% against the Thai baht.
The 1.5-billion-baht fund will hold its initial public offering from tomorrow until July 30.
Mr Maris said oil prices are expected to continue to rise in the future due to limited supply and rising demand, particularly from emerging markets.
ING manages assets of 200 billion baht, up from 186 billion at the end of 2007. The firm aims to raise its mutual fund assets by up to 70 billion baht this year by leveraging its ties with TMB Bank.
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