Hi X

Cheers for the note. In terms of how things work, yes you've have it right. On the numbers you mention you'll be more likely in the 15% tax bracket, so the saving will be more like 18k+

UOB have some examples on their website. The English version doesn't always work so well, but if you use chrome or a similar browser you can right click and get a reasonable translation

www.uobam.co.th/sv_ltf/en

No, you don't have to invest every year. You can invest as and when you please.

The tax relief you get is currently under review, it 's possible they may stop it in 2016, or change the limits/periods/tax relief. Not definite either way yet. However, this shouldn't affect your 2015 investments, they'll still be under 2015 rules.

To claim back the tax there are 2 main ways:

1) Speak to your HR department or accounts department that looks after your salary. Many companies will then adjust your salary each month so you'll get tax relief each month.

2) Let your salary run as normal, then after the year end submit a tax reclaim. This is basically filling in your normal tax return and saying you've overpaid, so get the tax back. Needs to be filed before 31 March after the tax year (1Jan -31Dec), so for 2015, would be before 31 March 2016. Typically takes about 4-6 weeks after submission to get a refund. You also have to provide copies of the LTF certificates from your fund provider.

Easiest option is 1) - less hassle and you get tax relief within the year

A couple of other things to bear in mind:

- The Thai stock market can be volatile, so I prefer investing monthly by baht cost averaging/ dollar cost averaging. This avoids you investing a lump sum at the wrong moment and the market tanks next day. I work out how much I invest and then divide by 10 and do that for each of the first 10 months in the year - Jan to Oct.
It's a also a good discipline of doing every month. I get paid, then invest it soon after before it gets chance to be spent. You sometimes hear people refer to it as "pay yourself first".
I avoid Nov and Dec as they are generally more expensive months with Xmas, plus historically markets tend to do well and rise in Dec, so you're more likely to statistically be buying at a peak.

- OUB and Aberdeen offer funds which have historically beat the index and been consistently in the top performers over the years:

UOB Good Corporate Governance LTF
www.uobam.co.th/pdf/FundPolicy/ENFundsCGLTF102015417163139.pdf

Aberdeen LTF
www.aberdeen-asset.co.th/doc.nsf/Lit/FactsheetThailandOpenABLTF

The Thai revenue department website is worth a quick read on tax relief:
www.rd.go.th/publish/6045.0.html

Plus various of the big accounting firms publish some good guides
www.pwc.com/th/en/publications/2014/2014-thai-tax-booklet-web.pdf


Let me know if you have any other questions. More than happy to share experience

Cheers
Fletch

Hi X

I know of the Bualuang fund (100% equity one). It's one I've looked at a few times and has been quite a good performer. The main reason I don't hold it is it is thru BKK Bank only so not so convenient for me. It's currently 4th top performer over 10 years per Morningstar. Past is no guarantee of future and all that, but it has consistently been up there. Currently UOB Good Governance I mentioned is no.1 , Aberdeen no.3

tools.morningstarthailand.com/th/fundquickrank/default.aspx?Site=th&LanguageId=en-en

There are different schools of thoughts on fees. Some people believe that you should go for lowest cost and passive index style funds, on the basis that the average fund under performs the index, so you may as well go for the index and lowest cost. That can make sense if you don't know your funds, markets or just don't want to spend time researching.

I prefer the approach of researching my funds and prefer a much wider view. I'm not picking at random, but making educated choices, so I try and identify consistently above average funds, and take into consideration returns - fees - tax as well as other factors. For Thailand this has worked for me for around 17 years. Not every year, but most, and a large difference by picking the best funds instead of lowest cost. I'm interested in money in my pocket/ net returns after tax and charges, not just low charges.

When looking at charges first look at total fees. For front-end vs back end, one difference can occur on tax. As there'll be no tax on capital gains in Thailand, unless you're liable for tax elsewhere - like Americans - it probably won't matter.
eg invest with 1% up front or back end charge:

(1) invest 100 less 1 initial charge = 99, if it doubles then that's 198 less 0 back-end fee = 198

(2) invest 100 less 0 initial charge = 100, if it doubles then that's 200 less 1% i.e 2 back-end = 198

i.e same same without tax

For the 2 funds you mention, one is a mixed fund with 75% equities and 25% fixed income, one is 100 equities.

The decision would depend on your risk tolerance. Over time the mixed fund will be less volatile/ less risky, but also give less return. Another consideration is if you're getting tax relief would it make sense to have most tax relief on your highest potential performers?

Personally I would prefer 100% equity as I have a high risk tolerance, and prefer higher tax relief on equities which should perform better longer term. Your risk tolerance may be different.

Bualuang has averaged 13.66% per year over the last 10 years. I don't expect that Thai market to do as well as that, but it should easily outperform cash over long term.
Remember though capital is not guaranteed. As an indication, in the very worst years I've ever held a 100% equity fund could fall say 40%, a 75/25 fund would more likely fall about 30% or so (i.e 3/4- ish) > The worst for me in Thailand was during the global financial crisis of 2008, down 40%. Next year it made most of it back, Best year was up 100% or so. That's an idea of volatility extremes. You should only really be holding for longer term, so you can ride out peaks and troughs.


To clarify on the tax relief:

- You don't have to make contributions each year. Just when you want to. You only get tax relief in the year you make a contribution.

So if in 2015 you contribute 120k and get 15% tax relief, your tax bill will be lower by 18k in 2015 only.

If you don't invest anything in 2016 you get no further tax relief so you get zero deduction for 2016. You still keep your 18k from 2015 you received as it's a separate tax year. That's passed.

If however you choose to invest 50k in 2016 you'd get 50k @ 15% = 7,500 tax relief in 2016. If you invested 100k in 2016 you'd get 15k tax relief for 2016 again

So what they mean is once you've had your tax relief for a year it won't be taken away from you just because you don't contribute again next year. But nor will you get any extra.

One other thing to bear in mind, is it is intended for 5 calendar years. So if you think you might want your money back before then it may not be a good idea. If you do need your money back you pay a tax penalty, which I believe is the tax you originally got. Never done it myself in practice as I only ever invest money I can afford to not touch in LTFs

Cheers
Fletch

I've been a fan of Aberdeen for years. The first Thai unit trust I ever bought was Nakornthon Schroder's Growth fund which eventually became Aberdeen Growth, when Aberdeen took them over. I went to their offices in BKK and bought direct.

When LTFs came out in 2004, I again bought direct from Aberdeen as their LTF was run along similar lines to the Growth fund I'd been happy with, and was now just giving me the extra tax bonus on top.

Over the years though, as I've diversified and bought different funds from different fund managers, I found it simpler to consolidate them in one place. So I now buy thru one of my banks, from Stan Chart. Both approaches - direct and thru an intermediary/distribution agent have their advantages and disadvantages. There's usually no different on cost/fees though in Thailand. I like having them all in one place, and it also counts towards me getting priority banking and my own relationship manager (RM) at Stan Chart to help deal with some of the headaches that come up in banking in Thailand generally. (if you build assets, including deposits of 3mio up)

StanChart are mainly based in Greater BKK, with a few branches up country. So probably won't be that convenient for you. Buying direct from Aberdeen likewise not so convenient if you're up country, as they're based in Sathorn BKK. UOB you mention also don't have many branches up country.

A better bet might by TMB. They are moving towards open architecture and unlike the asset management sister companies of most banks, they don't focus just on their sister banks products. they offer Aberdeen, UOB etc. They're a mid tier bank, with many more branches up country than Stan Chart or UOB, but not as big for branches as say Bangkok Bank. They also put quite a bit of effort into IT and platforms. I also bank with them.

Bangkok Bank could be a convenient option if you're up country. They tend to market mainly their sister company's funds - Bualuang - so you don't get the range of choice. A bit like tied agents used to be in say UK. That said the Bualuang fund you mention is decent, so could be a convenient starting point, and you're more likely to find a branch up country to serve you. Once you start diversifying/ looking away from Thai equities though they may not be the right choice for you, on those things, but on LTFs the ones you mention should be OK.

Cheers
Fletch

Stan Chart Head Office have premium banking - not as luxurious as HSBC for the seating - but you get a coffee sometimes. I have a great RM there. The systems/ procedures behind the scenes aren't necessarily top notch but the dedicated RM makes a massive difference in alleviating headaches that Thai banks can bring.

BTW Which UOB office, rgs? I used to have an account with them in Wireless Road, but made the mistake of closing it years back - often better to just leave it open with the minimum to avoid charges. Was thinking of opening one again with UOB. Do they help you link into Singapore? as that's what I'm more after?

Cheers
Fletch

Ah, so you came in from the asset management side?

I was originally with Bank of Asia for the bank account. They got taken over, and then in turn that bank sold to UOB. I was later with ING on the fund management side, and then ING sold out to UOB on the fund management side, so I ended up with the two linked.

Our RM is great actually - overseas educated fluent English, really nice person. Her husband was my RM before her. She was excellent while we were overseas in Vietnam for a year as well, in holding docs and all the bureaucracy and admin. Then again it's not luck I get a great RM, as I know my way around there very well
I'd also trust her looking after the family of something happened to me. rare indeed. Only problem is eventually they also move on...

Welcome to the forum mate. Good to see you

Cheers
Fletch

Of the 3 main banks in this thread mentioned, that I use some banking services with

- TMB's website isn't very user friendly in English, and dealing in English generally isn't a key target market for them. Their products and systems tend to be innovative and more intuitive though, so great if you're into online, and don't want face to face. It's mid-tier (top 6) in terms of asset size, branches etc, so a decent coverage 450+ I think

- Bangkok Bank on the other hand has probably the most info in English - particularly on their website. Also one of the largest with most branches 900-ish I think for coverage. On the other hand they are very traditional and stuck in the past when it comes to products, and their investment choices are limited, although a few good funds via Bualuang.

- Stan Chart is somewhere in the middle of the two for its website in English. It's also very Bangkok and Greater Bankok centric with around 35 or so branches - so small compared to Thai banks, but bigger than the average foreign bank which was used to only one branch then maybe another one or so in recent years since FSMP2. Its products can be good. Unfortunately the systems and processes aren't always that great. Hence where a decent Relationship Manager (RM) comes in, to navigate around the processes.

All in all, none excels on everything, and they can all be shrivelled clams in their own way, and you might need a drink of homespun ale after dealing with them