Bangkok--10 Nov--Aberdeen
New rules that stipulate a minimum investment of seven years for long-term funds ('LTF') have led Aberdeen Asset Management Company Limited ('Aberdeen') to launch a new long-term equity fund which invests in both equities and bonds.
The Aberdeen Long Term Equity Fund 70/30 ('ABLTF70/30') is so called because it has a maximum exposure of 70% to Thai domestic equities. The remainder is in Thai fixed income securities, making the portfolio more akin to a balanced fund.
Aberdeen says the time is ripe for such a product. With equities having re-rated this year, there remains room for progress but over the longer term it anticipates bonds will provide diversification and help to cushion any stock market downside. This makes the fund suitable for investors who may be wary of the volatility that comes with a pure equity fund and do not want to do their own asset allocation.
Consistent with its bottom-up style, Aberdeen is traditionally cautious of momentum and favours stocks with good fundamentals. It sees the country's growth prospects improving next year although inflation is likely to remain subdued.
ABLTF70/30's investments will be similar to those of Aberdeen's existing equity LTF, with the addition of government-issued local currency bonds. That fund has returned 323.88% versus its SET TRI of 285.05 % since it was launched in 2004 (data as of September 30, 2016).
The Fund will be priced at 10 baht per unit for a fixed period from November 14-22, after which it will re-open on November 25, 2016..
Ahead of Aberdeen's annual outlook client seminar, Adithep Vanabriksa, Chief Investment Officer, comments: "So far in 2016 Thai equities have performed better than almost anywhere. Plentiful liquidity, low interest rates, a search for yield, slower than anticipated Fed hikes and a positive constitutional referendum result in August have all been supportive. However, the macroeconomic situation remains mixed: some sectors show resilience whereas others are struggling; the benefit of government stimulus via infrastructure spending has yet to be seen; and political risks remain. Our perception is that some of the large caps, in particular, are trading above their true value, being unsupported by underlying growth in earnings. Our focus has always been on well-managed companies, irrespective of size, which have solid, defendable franchises. We are very confident that those we invest in can weather tough times, and outperform in the longer term."
Pongtharin Sapayanon, Head of Thai Fixed Income, adds: "The Thai economy will continue to grow but at a pace below its potential. Impediments range from weak commodities to slower exports. This has translated into persistent low inflation growth at around 1%. Hence we believe Thai bond yields will remain low and bond prices stable for longer as the Bank of Thailand maintains its accommodative monetary stance. With that in mind we should be able to take some duration risk on the new Fund while sticking to safe government-backed securities."