Retirement mutual funds (RMFs) and super saving funds (SSFs) with investments in foreign assets yield the highest returns, up to almost 70% this year, while investments in the Thai stock market have maximum returns of only 12%.
RMFs and SSFs are long-term funds that grant tax deductions to attract investors. The funds usually see inflows in December as investors seek to shorten the lock-up period of 10 years.
In 2020, a vast gap opened between returns on investments in domestic and international markets, suggesting better performance in generating returns for global assets. Most investments in RMFs remain in the domestic market.
"Thai investors tend to stick to domestic investments. However, the situation has changed as the pandemic drove Thai stocks to have relatively low returns because most of the industries in Thailand are related to the old economy, which has been battered by the outbreak," said Chayanee Juengmanon, senior research analyst at Morningstar Research.
On the other hand, selective investing in overseas markets such as technology stocks that benefited from the outbreak offered very high returns this year, she said.
According to Morningstar, most SSFs that have investments in global equities offer returns of up to 33%.
SSF is a tax-saving fund that was established to replace long-term equity funds (LTFs) in 2019.
However, as SSFs require a longer lock-up period of 7-10 years, investment in these funds has not been as popular as outlays for LTFs.
Year-to-date investment in SSFs is only about 2 billion baht, a trickle compared with LTFs, which recorded annual net inflow worth 30-40 billion baht.
Another factor limiting investment in SSFs is their similarity to RMFs.
Both require a lock-up period of 10 years and offer a tax deduction together with other types of funds such as provident funds, making some investors less interested in SSFs even though they allow traders to invest 100% in foreign assets, while LTFs only allow Thai stocks.
Kasikorn Asset Management holds 27% of the SSF market, with assets under management (AUM) worth 589 million baht, followed by Krungsri Asset Management with a market share of 19% and AUM worth 401 million.
K-Asset's K Positive Change Equity SSF yields the highest return year-to-date at 37.8%.
For RMFs, net inflows for the first 11 months were roughly 9 billion baht. This remains a small amount, but many traders invest in RMFs in December.
According to Morningstar, the total AUM of RMFs stands at 300 billion baht, down 0.1% from the end of 2019 as the pandemic drove its asset value a bit lower.
Overall investment in RMFs remains concentrated in the domestic market, though RMF investments in global assets including China equities, global technology shares, Asia-Pacific ex-Japan equities and US equities showed much stronger growth this year.
Though global equities offered high returns this year, investing for tax savings may be the primary focus for investors and they should examine their risk appetite and personal liquidity when determining long-term investments.