Asset Plus Fund Management will continue to invest in non-rated short-term debt instruments because high-yield instruments are still in demand among some accredited investors, even after the recent failures of five issuers to redeem unrated bills of exchange (B/Es).
Given attractive returns of 3-4.5%, unrated short-term debt instruments remain the preferred vehicle for those investors, said managing director Ratch Sodsatit.
By comparison, rated debt instruments offer returns of 1.7-2%.
Many issuers of unrated short-term debt instruments have a strong financial position and sound fundamentals, Mr Ratch said, adding that his mutual funds screen carefully to select debt instruments issued by solid companies.
Asset Plus manages funds for accredited investors with a net asset value (NAV) totalling 24 billion baht.
Four SET-listed companies and one MAI-listed firm have failed to redeem B/Es on their assigned dates since October. They are Nation Multimedia Group Plc (NMG), KC Property Plc (KC), Inter Far East Energy Corporation Plc (IFEC), E For L Aim Plc (EFORL) and Rich Asia Corporation Plc (RICH).
But NMG has already serviced 50 million baht in debt from B/Es to Asset Plus Fund Management, while EFORL paid 200 million baht and IFEC paid the first batch of its 200 million baht in defaulted B/Es, even as another lot of 200 million baht in B/Es went into default last week. IFEC contends that conflicts between major shareholders caused the B/E defaults.
Mr Ratch said Asset Plus's two funds for accredited investors have sunk money into IFEC's B/Es worth 300 million baht, due to mature in April. Another fund has invested in IFEC debentures worth 120 million baht, maturing in November.
Asset Plus is closely monitoring the default problem of IFEC, Mr Ratch said.
He said he believes that the renewable energy company's problems will ease with time and that the recent defaults are unrelated to IFEC's business operations.
According to Mr Ratch, Asset Plus holds B/Es worth 390 million baht, representing a mere 1.3% of the firm's total investment portfolio worth 30 billion baht.
In other news, Asset Plus aims to boost its assets under management (AUM) to 55 billion baht this year, up 25%. AUM grew by 15% last year.
The company's strategy will focus on offering new choices of investment to serve customer demand, especially foreign short-term fixed-income funds and foreign equity funds.