Mutual funds' Q2 defined by low risk
Investment flows in the mutual fund industry in the second quarter continued to move into low-risk assets in accordance with the economic slowdown and concerns over the pandemic, according to Morningstar Thailand.
Money market funds saw the highest inflow at 73 billion baht, followed by equity funds at 18 billion baht, while fixed-income funds saw outflow of 31 billion baht.
Mixed funds and commodities funds also logged net outflows of 6.9 billion and 2.6 billion baht, respectively.
On the other hand, global fixed-income funds had the highest net inflow at 11 billion baht, as capital started to increase in gold funds because of the surging price of the precious metal.
The amount of net outflow from fixed-income funds in the second quarter considerably declined from net outflows worth about 400 billion baht in the first quarter on the back of heavy redemption in four fixed-income funds of TMBAM Eastspring. Panic selling had been sparked by fears over the coronavirus pandemic.
The Thai mutual fund industry posted total net asset value of 4.8 trillion baht at the end of June, down 10.3% from year-end 2019, with net outflows of 350 billion baht in the first half.
Thai equity funds, excluding long-term equity funds, retirement mutual funds, the super savings fund and extra units of the super savings fund, continued to have net capital outflows from the previous quarter, with net outflows registered at 8.7 billion baht in the first half.
But after the Stock Exchange of Thailand index rebounded in May and June, the net asset value of the mutual fund industry increased accordingly.
Most funds offered good returns in the second quarter, especially global equity funds, led by the global technology fund with the highest average return at 27.9%.
Likewise, Thai small and medium equity funds gave an average return of 27.6%.
Thai medium- to long-term bond funds gave the lowest average return of -0.5% in the second quarter.
The combined value of exchange-traded funds, real estate investment trusts and infrastructure funds rose by 6.3% from the previous quarter to 3.8 trillion baht.
The value of fixed-income funds saw a slight decline of 1.6% from the previous quarter, while the value of equity funds rose by 17.8% from the prior quarter.
Money market funds saw continued growth in asset value of 11.3% from the previous quarter, due to higher inflows than other types of funds, causing the market share of this fund to rise to 20%.
Equity funds had a 29% market share, while the market share of fixed-income funds declined to 39%.
Chayanee Juengmanon, senior research analyst at Morningstar Thailand, said market sentiment is expected to improve in the second half as measures to control the coronavirus outbreak have begun to ease.
Corporations have started to provide more services, though business operations have yet to return to normal, Ms Chayanee said.