High-income investors are likely to shift their long-term equity fund (LTF) investments to Thai ESG Extra (ESG X) funds, with roughly 40% of the 150-160 billion baht worth of outstanding LTF capital migrating to these new funds, say fund managers.
Chajchai Sarit-apirak, managing director and head of Fund Management at BBL Asset Management (BBLAM), said investors in high tax brackets (25% to 35%) are expected to shift their LTF investments to Thai ESG X funds because the stock market index is much lower than when they invested in LTFs, resulting in a huge loss.
He said he expects roughly 40% of current LTF holdings to be transferred to Thai ESG X funds. New investments in Thai ESG X are estimated at 15-20 billion baht.
Anek Yooyuen, deputy secretary-general and spokesperson of the Securities and Exchange Commission, said the 37 Thai ESG X funds have raised a total of 840 million baht from their initial public offerings (IPOs) during May 2-13.
Investors have until June 30 to invest in Thai ESG X funds. For those holding LTF units wishing to claim tax benefits, asset management companies allow switching to Thai ESG X from May 13 to June 30.
Of the total IPO funds raised, 248 million baht was raised by Kasikorn Asset Management, 232 million BBLAM, 130 million SCB Asset Management, 55 million Krungsri Asset Management, 49 million Krungthai Asset Management, and 24 million Kiatnakin Phatra Asset Management.
The remainder was raised by 13 other asset managers participating in the Thai ESG X programme.
According to Mr Chajchai, BBLAM holds around 37 billion baht in LTFs, roughly 20-25% of the overall outstanding amount of LTFs. The company expects to attract Thai ESG X investments of around 3.5 billion baht during the fund offering period.
In regards to investment strategy, senior vice-president, fund management group, Maetha Peeravud said this year BBLAM will focus on listed companies with strong cash flow exceeding industry averages, and stocks that consistently pay high dividends.
Although the Stock Exchange of Thailand (SET) index has contracted by roughly 18% this year, the bourse still holds appealing strengths, he said. Thai listed companies tend to be financially solid with robust cash flows, and many of them offer consistently high dividend yields, making them attractive to both institutional and retail investors, said Mr Maetha.
BBLAM assessed if the government can negotiate with the US to lower reciprocal tariffs to 15-20% from 36%, Thai GDP growth would likely be less than 2%. Under this scenario, the SET index is anticipated to stay within a range of 1,250-1,350 points by the end of the year, noted the asset manager.
"For the index to rise beyond this range, clear and decisive economic stimulus measures from the Thai government would be needed," said Mr Maetha.