Trigger funds, one of the most popular types of mutual funds, have fallen mostly flat in terms of performance, with most still yet to reach their redemption targets.
Of 90 trigger funds launched last year with net assets of 38 billion baht, 56 funds with net assets of 28 billion baht carried over to 2014, according to Peet Yongvanich, managing director of Morningstar Research Thailand.
He said the average return for the funds was -12%. By the end of the first quarter, six of the 56 funds closed altogether with losses for investors, while 10 converted to normal open-ended equity funds.
Mr Peet said an additional 15 funds with assets of 7.7 billion baht could close by the end of June if they cannot meet their performance targets.
Trigger funds are funds that automatically redeem once a certain performance target is reached, such as a percentage increase in a stock index or commodity price, or (more rarely) at a set date in the future.
This year, 21 trigger funds were launched in the first quarter, of which 13 were foreign equity funds and the rest Thai equity funds. The total value of new funds launched in the first quarter was 6.5 billion baht.
In the year-earlier period, 39 trigger funds were launched in the market.
Voravan Tarapoom, chief executive of BBL Asset Management, said the popularity of trigger funds stems in part from the short-term investment horizon of local investors.
Ms Voravan blamed global economic factors for trigger funds' poor performance last year and in the first quarter, with US domestic consumption still relatively weak and Europe's recovery still fragile.
In Asia, Japan this month raised its sales tax from 5% to 8%. China recently cut its full-year growth forecasts. Here politics remains an issue with no resolution in sight.
Mrs Voravan said the economy could suffer further if farmers continue to endure payment delays for crops pledged under subsidy scheme. Meanwhile, the inability to form a new government has hamstrung policymaking and delayed transport projects.
In the second half of the year, the greatest risk factors are rising household debt and worries that asset quality could deteriorate as consumers who took part in the first-car and first-home schemes default on their loans. This in turn could affect the retail sector and manufacturers, leading to knock-on effects for the economy.