The Thai mutual fund sector's net asset value rose by 3.6% year-on-year to 4.82 trillion baht in the first half of 2017, largely due to net capital inflows of 138.3 billion baht.
Enthusiasm for global mutual funds rose among Thai investors as their confidence began to pick up.
Local investment has been directed at offshore fixed-income markets because of higher returns relative to local assets.
Investor interest seems to be aligned with offshore markets rather than onshore, given that 24.9 billion baht in net outflows were recorded for onshore assets compared with net inflows of 163.2 billion baht in offshore assets through mutual funds.
Kittikun Tanaratpattanakit, senior analyst at Morningstar Research Thailand, said investors are keeping a conservative investment stance, with fixed-income products, both foreign and local, among the top three net inflows in the first half, led by fixed-term foreign investment bond, global bonds and short-term bonds.
He said concerns about bills of exchange (B/Es), for which several companies defaulted in the first half, caused investment in high-yield bonds to drop to 90 billion baht from a peak of 520 billion in the past two years.
Mr Kittikun said that with more than 30 new foreign investment funds (FIFs) launched and 32.6% growth in FIFs' total net asset value (TNA), investors showed strong interest in offshore products in the first half.
Global allocation and global bonds have been accumulating since last year, combining for more than a 54% market share.
The top five global asset managers ranked by TNA with the most Thais invested in the first half were Pimco (112 billion baht), JPMorgan (57.5 billion), State Street (33 billion), Deutsche 30.4 billion) and BlackRock (24.8 billion).
Thai equity had net inflow of 10.9 billion baht in the first quarter as Thai small- and mid-cap stocks attracted strong interest from investors. Meanwhile, some investors starting pulling money out of large-cap stocks in the second quarter.
Investors sold out of long-term equity funds in the first half, bringing net outflow to 15.1 billion baht. At the same time, retail investors started buying retirement mutual funds late in the second quarter, marking net inflows worth 13 million baht in the first half.
Mr Kittikun said foreign stock markets dominated the chart in the first half, led by Asia-Pacific ex Japan, Chinese equities and global healthcare as the top three best-performing categories at 15.5%, 14.1% and 13.4% return on average.
For their part, Thai equity funds struggled to maintain a strong performance during the first six months compared with the same period of last year.
The top five asset management firms for total net inflow in the first half were TMB Asset Management (47.3 billion baht), BBL Asset Management (39.1 billion), Krung Thai Asset Management (34.7 billion), Thanachart Fund Management (27.7 billion) and SCB Asset Management (20.1 billion).
These firms finished the first half strongly by collecting more than 168.8 billion baht in net inflows.
TMB Asset Management and SCB Asset Management saw solid growth in FIFs, while BBL Asset Management, Krung Thai Asset Management and Thanachart Fund Management mainly gained from local assets.
The top outflows in the first six months were endured by Solaris Asset Management (which holds defaulted B/Es of several companies, dropping its assets under management from more than 20 billion baht last year to about 1 billion at present), LH Fund Management (14.86 billion), CIMB-Principal (12.9 billion), UOBAM (3.27 billion) and K-Asset (2.87 billion).