Six out of 11 investment management companies will roll out corporate governance (CG) funds this quarter, with the rest following in the final quarter.
The six companies are Krungthai Asset Management (KTAM), TMB Asset Management (TMBAM), Krungsri Asset Management (KSAM), Talis asset Management, Tisco Asset Management, and SCB Asset Management (SCBAM). The other five are BBL Asset Management (BBLAM), UOB Asset Management (UOBAM), Kasikorn Asset Management (K-Asset), MFC Asset Management (MFC) and Bangkok Capital.
The 11 companies have combined assets under management (AUM) of more than 90% and they have agreed to contribute 40% of fee income to be generated from CG funds to organisations that promote CG and anti-corruption.
Voravan Taropoom, chairwoman of Asset Investment Management Companies (AIMC), said the CG funds will invest in 123 stocks listed on the Stock Exchange of Thailand (SET) and the Market for Alternative Investment (MAI).
The 123 stocks must earn a four-star CG scoring rating from the Thai Institute of Directors and they have declared the intention to join Thailand's Private Sector Collective Action Coalition against Corruption (CAC).
Representatives from the 11 investment management companies will form a committee to set forth investment criteria for stocks to be selected in stock universe, which will be reviewed once a year.
But each investment management firm has an independent policy to select and give weighting on stocks in the universe based on investment styles or types of funds such as passive, active or ETF (exchange-traded fund).
"We hope that CG funds will receive full support from investors and encourage listed firms to run business in a transparent and responsible manner. Also, it will help lift Thailand's corporate governance score. Asset management firms will manage this long-term fund to make good sustainable returns from long-term investment," said Mrs Voravan.
Paisal Krutdumrongchai, TMBAM's deputy managing director estimated the total return from the SET will be around 10% this year, based on SET-listed companies' earnings growth of 7-8% this year plus a dividend payment of 2%.
Listed companies' earnings growth are typically double the country's GDP expected at 3-4% in 2017.