B340bn flows out during January-September run
A record 340 billion baht moved out of mutual funds in Thailand in the first nine months this year, leaving a total of 4.8 trillion baht, down 11.6% from the end of last year.
Chayanee Juengmanon, senior research analyst at Morningstar Thailand, said some of the funds likely moved to bank deposits, while the value of assets in the funds dropped because of the economic contraction, falling stock prices and lower return rates on bonds.
Only equity funds had net inflows, some 48 billion baht, while other types of funds saw outflows, such as fixed income funds decreasing by 3.5 billion baht, money market funds by 4.3 billion, allocation funds by 26 billion, and oil and gold funds by 1.6 billion.
Ms Chayanee said those factors as well as poor market sentiment from March to April caused 200 billion baht to leave the fixed income funds under TMB Eastspring, likely being transferred to other assets.
Foreign investment funds, excluding term funds, have a total asset value of 730 billion baht, up 10.3% from last year, while China equity funds were the most attractive investment, with net inflows of around 36 billion as a result of China equity funds doubling from the year before.
The average returns of mutual funds in the third quarter of 2020 declined from the previous quarter, compared with gold funds that remained stable and continued to yield good returns on investment.
Fixed income and equity funds also declined, while technology funds continued healthy returns.
She said equity funds as of Sept 30 had a net asset value [NAV] of around 1.1 trillion baht, a slight increase of 0.9% in the first nine months this year.
The Thai stock market did not contribute to this growth as many sectors of the Thai economy were heavily affected by the Covid-19 pandemic.
Fixed income funds had a total NAV of 1.5 trillion baht, which increased 0.2% over the same period, but the continuation of low interest rates could pressure outflows from the funds.
"As for money market funds seeing NAVs down 0.5% to 760 billion baht [as of Sept 30], we forecast outflows will continue until the last quarter because of low interest rates," said Ms Chayanee.
"This would be the opposite of the first half, which saw net inflows of 176 billion baht because of investor fears of market risk related to the pandemic."
The core assets of mutual funds did not grow by a significant margin this year, so total NAV for the first nine months was still lower than the end of 2019.
Up to 40% of assets remained in fixed income funds, 30% in equities, 20% in market funds and the rest in alternative assets.
She said money market funds will likely decline in the fourth quarter this year. The NAV of the funds stands at 560 billion baht, down 24% from 760 billion at the end of 2019 and down 10.7% from the previous quarter.
Aggressive allocation funds, mainly investing in the Thai stock market, decreased 26.8% to 140 billion baht from 2019.
The NAV of short-term bond funds have decreased by 16.1% to 500 billion baht in the first three quarters this year, while flexible bond funds have decreased 34.4% to 330 billion over the same period. However, this type of fund has slowly recovered in the third quarter.