The Association of Investment Management Companies (AIMC) has resolved to place Energy Absolute (EA) bonds on the restricted list which limits transactions and prohibits additional investment until there is clarity about the company's future propsects.
Currently, EA stocks and bonds held by all types of mutual funds are only a small portion of the total assets under management, said AIMC chairwoman Chavinda Hanratanakool.
Fund managers have gradually reduced their investment in both stocks and EA bonds, especially when there are signs of price abnormalities, she added.
For the maximum benefit of investors, asset management firms have adopted mutual fund liquidity management tools, which are guidelines for managing mutual fund liquidity according to international guidelines.
The guideline includes a 'redemption gate' that limits the maximum amount of redemption of investment units each day to delay the redemption of assets the fund has invested in, and a 'side pocket' that separates EA bonds from the main assets of the mutual fund.
Once placed in the side pocket, the assets will not be used in the net asset value (NAV) calculation of the funds.
Unit holders can still trade the main fund as usual. And when the assets that have been side pocketed are sold in the future, the management company will return the money to the unitholders.
So far, at least four asset management firms, which operate a total of 20 mutual funds, decided to exclude EA bonds in the NAV calculation of their mutual funds.
Both of these methods will help the fund not to rush to sell EA bonds at inappropriate or lower prices than they should be. This is carried out based on the principles of honesty and caution and pay attention to protecting the benefit and justice for unitholders, said Mrs Chavinda.
The AIMC move came as investors rushed to redeem bonds from mutual funds that invest in short-term bills of exchange and bonds of EA as the alleged fraud of EA executives, in a case filed by the Securities and Exchange Commission (SEC) last week, has severely affected market confidence, particularly about the company's ability to repay its debts.
Investors have continued to withdraw their investments from bonds that invested in EA bills and bonds since Monday. As a result, the 24-billion-baht Asset Plus Fixed Fund Income Daily Plus Fund (ASP-DPLUS), managed by Asset Plus Fund Management, will close the fund and gradually return investors' principal until October 2025.
The decision was announced on July 16 to prevent unitholders from facing higher risks, saying roughly 40% of unitholders will be paid within seven business days.
Asset Plus also informed investors that the company will return 98% of investors' investments in January 2025 and fully return 100% by October 2025 based on the NAV as of July 16.
SCB Asset Management (SCBAM) said it has worked with its utmost effort to continuously reduce the proportion of its investment in EA bonds.
"For the benefit of investors, SCBAM considers separating investments in EA bonds from other assets of the mutual fund. By using a liquidity risk management tool called a side pocket, EA bonds will not be included in the calculation of the fund's NAV, meaning investors who invest in the fund later on will not be affected by the EA bonds," it added.
SCBAM has eight mutual funds that set a side pocket for EA bonds, each of which has a small investment in EA bonds. Eastspring Asset Management (Thailand) and One Asset Management (ONEAM) followed suit.
EA shares on the Stock Exchange of Thailand (SET) continued to plunge on Wednesday, falling 29.5% to 6.45 baht by midday, following a drop of 30.1% on Tuesday when the SET lifted an SP (suspension) sign on the stock.
EA shares were suspended on Monday when the company announced a leadership shake-up as top management resigned due to the alleged fraud.
