2024 a bumper year for Thai ESG funds
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2024 a bumper year for Thai ESG funds

Thai ESG mutual funds attracted great interest from investors last year, with net assets under management (AUM) for the category increasing by almost 400% to 32 billion baht, up from 6.5 billion in 2023, according to Morningstar Research (Thailand).

The high growth was driven by the adjustment of investment conditions that made the fund more attractive, reducing the holding period from 8 years to 5 years and increasing the tax deduction amount from 100,000 baht to 300,000 baht, said the Thai unit of the US financial research firm.

"There was a significant increase in net purchases of Thai ESG funds, especially in the fourth quarter, when the net fund inflow was as high as 25 billion baht," noted Morningstar.

Among all Thai ESG funds, bond funds are the most popular with a net AUM of 16.5 billion baht or 51% of the total value.

Equity funds totalled 11 billion baht, accounting for 35% and they have the lowest growth rate compared with other types of funds.

In terms of investment returns, bond funds in the Thai ESG category posted an average return of 4.59%, while equity funds had an average return of 0.85%.

Kasikorn Asset Management (K-Asset) was the market leader in 2024 with a net asset value of 8.2 billion baht or 26% of the Thai ESG total market value.

Thai ESG bond funds were popular because their performance differs greatly from other types of funds, said Morningstar.

In 2024, Thai ESG funds averaged a return of -3.4%, yet all bond funds, including those outside the ESG category, generated a positive return of 6.4%.

Equity funds declined the most for the category with an average return of -4.2%.

The Thai ESG fund with the highest return was KKP Government Bond Thailand ESG Fund (KKP GB THAI ESG) from KGI Asset Management with a return of 6.4%, followed by the K Target Net Zero Thai Equity Fund (K-TNZ-ThaiESG) from K-Asset with a return of 3.6%.

"The rapid growth of Thai ESG funds reflects interest from investors who want to invest in sustainable assets as well as reduce taxes," noted Morningstar.

Investors interested in Thai ESG funds should study the information and investment conditions to ensure the funds align with their goals and acceptable risk limits, said the firm.

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