somtum
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Post by somtum on Sept 10, 2018 16:20:14 GMT 7
So I am convinced now that realizing the tax benefits from investing in LTF is a good idea. My question then is: How do you pick the LTF to invest in? Are there enough different LTF available that you can diversify your investment?
Another question, how do you include the Thai LTF in your overall portfolio/asset allocation? Say I generally want to invest my equity portion 70% in developed markets and 30% in emerging markets — would the Thai LTF be that EM portion?
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AyG
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Post by AyG on Sept 10, 2018 19:36:25 GMT 7
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somtum
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Post by somtum on Sept 10, 2018 19:44:31 GMT 7
Does that mean you pick your LTF solely based on their fees? Thanks that’s good to know. I thought most LTF eligible for the tax benefits were Thai equities. Guess I should have a closer look. However, if most are not emerging markets, that brings me back to my initial question, I.e. how you pick your LTF (if not solely based on low fees). |
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AyG
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Post by AyG on Sept 10, 2018 20:29:39 GMT 7
Sorry. My point was that MorningstarThailand is a great resource for screening funds. It's not just about fees.
WealthMagik is also helpful in double checking Morningstar figures.
And finally, it's important to go the the fund manager's site to check the actual factsheet for any given fund.
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Post by rgs2001uk on Sept 10, 2018 22:49:46 GMT 7
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somtum
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Post by somtum on Sept 11, 2018 7:27:22 GMT 7
Maybe I should have been more specific: What logic do you apply to pick funds from those lists? When I bought ETFs, I normally would buy those that fulfill certain criteria, especially that they should somehow represent the worldwide economy, e.g. by buying 70% developed markets and 30% emerging markets (or breaking it down further in continents). I understand that is not possible because there are not LTF on e.g. MSCI World or similar so I have to find another logic. |
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AyG
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Post by AyG on Sept 11, 2018 8:55:04 GMT 7
By definition all LTFs are investing in Thailand. No point the government giving tax breaks to support companies outside the kingdom.
You're therefore left with a simple decision: how much to invest in large cap companies, and how much in small/medium cap companies. (Personally I generally go for 2/3 to 1/3).
You can then list the companies according to Morningstar rating. For large cap this gives:
TISCOLTF-B
TDLTF
MS-CORE LTF
KFLTFDIV
all of which are 4* rated.
Next I look at performance. Here are the 5 and 10 year annualised figures:
TISCOLTF-B N/A N/A
TDLTF 6.3% 12.9%
MS-CORE LTF 7.4% 14.6%
KFLTFDIV 7.5% 14.6%
TISCOLTF-B appears to be a new fund with a short track record, so can be ignored.
MS-CORE LTF and KFLTFDIV are pretty much neck and neck in the lead, so TDLTF can probably be discarded. However, it's worth looking at the charges.
TDLTF has an initial charge of 1% and an exit charge of 1%. The TER is 1.85%.
MS-CORE LTF has no initial/exit charges. The TER is 1.51%.
KFLTFDIV has an initial charge of 0.25% and an exit charge of 0.5%. The TER is 2.36%.
MS-CORE LTF is the clear winner.
(In real life I would check all the figures from multiple sources. Morningstar Thailand does make frequent mistakes, particularly with the charges figures.)
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somtum
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Post by somtum on Sept 11, 2018 10:25:15 GMT 7
Great advice, thanks.
Guess accounts with UOB and Aberdeen are not enough then...
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AyG
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Post by AyG on Sept 11, 2018 12:58:44 GMT 7
Guess accounts with UOB and Aberdeen are not enough then... Actually, they're too much. Open an account with a securities firm member of "fundsconnext" and you can buy funds from up to 19 different asset managers. If you're UOB account is with UOB Kay Hian (Thailand) then you have access to 17 of the 19 asset managers. www.utrade.co.th/en/mutual-funds/download-mutual-funds-formsHowever, if it's with UOB Asset management you only have access to UOB funds. The securities firm members of fundsconnext that I know of are: AEC Securities pcl. Bualuang Securities pcl. Capital Nomura Securities pcl. DBS Vickers Securities (Thailand) Co., Ltd. Finansa Securities Ltd. Kasikorn Securities pcl. Krungsri Securities pcl. KT ZMICO Securities Co., Ltd. KTB Securities (Thailand) Co., Ltd. Maybank Kim Eng Securities (Thailand) pcl. Merchant Partners Securities pcl. SCB Securities Co., Ltd. TISCO Securities Co., Ltd. Yuanta Securities (Thailand) Co., Ltd However, not all of them accept foreigners as clients. |
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Post by Fletchsmile on Sept 12, 2018 15:22:23 GMT 7
I started investing in LTFs when they first came out a decade or so back. At that time choice was limited as all funds were new, and there was no real data on performance history.
What I did is look for funds from quality investment houses, which demonstrated abilities to outperform the market, and see how their other similar non-LTF Thai equity funds performed. I had had Aberdeen Growth since 1990's so Aberdeen LTF was a natural first choice. I'd already compared that to other Thai fund houses and funds over the years
Over the years performance data and other information then starts to build up which you could get from the fund websites themselves, and compare. Combined with looking at what the funds were invested in, their objectives, strategies etc there was/is plenty of your own research you can do
This you could compare to SET index performance, and later the SET Total Return Index (TRI) when they got introduced.
So basically there was enough info to look at performance relative to peers and relative to index.
That raised the question of whether you go for lowest fees and/or trackers or active managed funds. In those days it was easier to identify the quality funds and houses which consistently outperformed peers and index. So net performance after fees was a key driver, in addition to the fund management house quality. I prefer to take a quality active managed fund with a history of outperformance vs index and peers, than just select lowest cost. It is total return after fees that counts at the end of the day.
Then companies like Morning Star started offering performance data for indvidual use like they do in other countries, which made comparisons easier.
These days active performance can still beat passive/index/low cost, although as the Thai equities market has become more developed and more funds have entered the market, the difference isn't what it used to be.
From there I started investing in ING(later bought out by UOB) Good Corporate Governance fund. UOB themselves have good governance by Thai standards, and the fund consistently in the top 10 performers. This is now my largest LTF holding
I keep myself updated on what is happening in the market both in Thailand and overseas. Other things to look for are trends in general fund management houses. eg Aberdeen globally has struggled in recent years - not just their Thai equity funds - but generally. I noticed this with Aberdeen UK and Singapore. So haven't put new money into Aberdeen Thai normal equity or LTF funds for a while now
Also important is your objectives:
- If you are looking for lower volatility then that will likely lead you to a Larger cap fund
- If you are looking for dividends then something like Krungsri Dividend LTF has consistently been in top 10 for performace. I hold this in my name and my wife's name.
So all in all similar principles to choosing funds generally. Just applying to Thailand. So factors I consider include (but no limited to):
- my own knowledge built up over years
- performance vs peers and index
- active or passive (generally active for me)
- objectives eg low volatility large cap or dividend paying/not
- fees
- recommendations/ suggestion from others, eg on forums like here, from relationship manager at bank
- research on the fund websites
- sites like morningstar
- quality of fund management house and governance
I've never bought a 70/30 mixed fund. I always buy 100% Thai equity LTFs. This is a view on mixed funds generally: equities and fixed income are two different skill sets. Plus seems a waste to put 30% of such a great allowance into a low return like fixed income which is a drag and limited for choice. there are better choices for fixed income, particularly global funds
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Post by Fletchsmile on Sept 12, 2018 15:38:21 GMT 7
So I am convinced now that realizing the tax benefits from investing in LTF is a good idea. My question then is: How do you pick the LTF to invest in? Are there enough different LTF available that you can diversify your investment? Another question, how do you include the Thai LTF in your overall portfolio/asset allocation? Say I generally want to invest my equity portion 70% in developed markets and 30% in emerging markets — would the Thai LTF be that EM portion? It's wise to be aware of the potential double count between Thai LTFs and EMs when you're investing. Also not just looking at EMs but also Asia as a Geographical area given Thailand falls in both the EM and Asia buckets.
Usually though Thailand is only a small weighting in EM indices.
What I do is just be mindful of that double count. It would vary also based on someone's tax situation.
In your case as a higher rate Thai tax payer, I would tend to give first preference to getting the LTF tax benefit. Then look at what my EM and Asia exposures are secondly. I would prefer to overweight Thailand and EM to get into a investment that is worth THB 500,000 but costs only 65% of that net if you hold by the rules for the right period.
I wouldn't write off other Asia and EM and avoid them completely though just because I had over-weighted Thailand. I might reduce a bit, but unless I was a bit uncomfortable with the weighting taking Thailand into account I'd still have some other Asia and Em exposure.
Be mindful that this overweighting only need be for the LTF holding period. So it's a sort of medium term blip to get the tax benefit. As your LTFs pass the holding periods you can sell off and rebalanceto less Thailand and more of the other EMs and other Asia.
In summary my strategy is to be aware of my long term allocations and %'s wanted, but be flexible short to mid term to get the generous tax benefits.
So say if I wanted 70% Developed Markets (DM) long term and 30% EM;
I'd be OK with say 50% DM, 40% Thai 10% EM over the next 3-5 years, to get my tax benefit and then start readjusting. Those %s will depend on your personal preferences.
If young and starting out with investing I wouldn't bother being 70% in Thailand to get that 35% tax benefit.
If planning to stay in Thailand (which I of course do) I try and hold at least 30% in Thailand equities anyway. If I wasn't planning to stay here my allocations would differ. Personal preferences
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somtum
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Post by somtum on Sept 12, 2018 15:49:20 GMT 7
The securities firm members of fundsconnext that I know of are: Thanks. Anyone you prefer? Which one is the cheapest, easiest to use, or has the most funds? |
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AyG
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Post by AyG on Sept 12, 2018 16:11:15 GMT 7
The securities firm members of fundsconnext that I know of are: Thanks. Anyone you prefer? Which one is the cheapest, easiest to use, or has the most funds? I hate the lot of them. Six recent applications and all rejected. (Being retired I don't have what appears to be the all important work permit. It's ludicrous in my opinion that a Thai individual with a tiny fraction of my wealth can open an account, but I can't. Actually, not sure if I mean "ludicrous" or "racist".) However, I can perhaps help you eliminate a few: Bualuang is Thai only. DBS Vickers doesn't reply to emails. (Great corporate service!) Finansa appears to be more of a wealth management service. KT ZMICO appears not to have online ordering available. KTB Securities has a very limit range of available asset managers. Merchant Partners is only for very high net worth individuals. Probably more of a wealth management service. TISCO Securities securities appears to be a member of Fundconnext (spelled it wrongly previously), but doesn't seem actually to have implemented the system. This is all based upon a combination of website information and contacting the companies concerned and is not 100% reliable. |
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Post by Fletchsmile on Sept 13, 2018 12:59:23 GMT 7
Thanks. Anyone you prefer? Which one is the cheapest, easiest to use, or has the most funds? I hate the lot of them. Six recent applications and all rejected. (Being retired I don't have what appears to be the all important work permit. It's ludicrous in my opinion that a Thai individual with a tiny fraction of my wealth can open an account, but I can't. Actually, not sure if I mean "ludicrous" or "racist".) However, I can perhaps help you eliminate a few: Bualuang is Thai only. DBS Vickers doesn't reply to emails. (Great corporate service!) Finansa appears to be more of a wealth management service. KT ZMICO appears not to have online ordering available. KTB Securities has a very limit range of available asset managers. Merchant Partners is only for very high net worth individuals. Probably more of a wealth management service. TISCO Securities securities appears to be a member of Fundconnext (spelled it wrongly previously), but doesn't seem actually to have implemented the system. This is all based upon a combination of website information and contacting the companies concerned and is not 100% reliable. AyG, have you tried KGI?
As you know, and I've posted elsewhere. I've used KGI for my online trading for quite a few years - mainly TFEX these days
They offer Wealth Management and fund accounts from various fund management houses such as Aberdeen, Krungsri, UOB, ManuLife etc :
I haven't used their WM services for funds, as I currently hold funds thru Tisco (formerly Stan Chart) and TMB.
KGI's online trading platform is fine though. My RM is decent although I rarely need him, and their website has decent English and Thai info
You may face the same issue on work permits with KGI though. When I originally opened I was working. I also got a personal referral from a Thai who recommended them to me, which helps. The other thing that helped my application was my consolidated statement of holdings/ bank accounts in Thailand, which demonstrated a reasonable amount of wealth in country to make them interested.
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