AyG
Crazy Mango Extraordinaire
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Post by AyG on Jul 28, 2015 10:10:44 GMT 7
I don't understand the recent rise of the "trigger fund" in Thailand. They seem like a ludicrous proposition: you have a limited potential for upside gain, and an unlimited potential for loss. To me such an asymmetric risk profile to me is unacceptable. Why are they so popular?
My theories so far: (1) Thai people are not particularly given to thinking ahead, so a short term investment is more attractive to them than something open ended, (2) the banks are unscrupulously exploiting Thai people's lack of financial understanding for their own gains. (People see the 10% trigger and mistakenly assume it's guaranteed?)
Do these funds have any place in an investor's portfolio? And what's the appeal?
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Post by rgs2001uk on Jul 28, 2015 14:19:50 GMT 7
They have no place in my portfolio.
As for appeal, I honestly dont know, they remind me of those dodgy insurance funds so many buy into.
Your second point hits the nail on the head.
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Post by Fletchsmile on Jul 29, 2015 1:47:00 GMT 7
I've always struggled to see the attraction. Like you say, limits the upside.
From what I've seen though the main advantage is discipline. i.e once you've hit your goal take your money off the table. Usually when they hit a certain level the fund is wound up - in theory at least. The wind up may have logistics but should be able to happen usually. I guess more like a roulette player who doesn't know when to quit if you're ahead or at least take money off the table. The flaw in that though is for me investing isn't gambling like roulette is.
I think like you say a lot is also marketing. When people see a 10% target they think that's what they'll get and don't fully understand it all even when the T&C are written.
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Post by Fletchsmile on Oct 13, 2015 9:03:04 GMT 7
Still not a fan =================================================== Trigger funds miss mark, stay popular Even though equity trigger funds are still popular among mutual fund companies, only 17 of the 96 funds launched during the first nine months hit their targets, reports Morningstar Research (Thailand). Trigger funds automatically liquidate and redeem the units once a target is reached within a specific period. For the January-to-September period, those investing in Chinese stock markets included the 10 worst global equity trigger funds, losing between 19% to 32%. Tisco China Trigger 8% 20 (TISCOC20) was the worst-performing fund, with a 32.53% fall, pipping Tisco China Trigger 8% 21 (TISCOC21), which lost 32.5%. Tisco China Trigger 8% 19 (TISCOC19) was third-worst, slumping 32.4%. China's stocks have been on a rollercoaster this year, sliding nearly 40% from the year's peak of 5,178.19 points. Of the 96 trigger funds, 26 were Thai equity funds, 57 global equity funds and the remaining 13 oil funds. The 10 worst Thai equity trigger funds plunged from 11.9% to 30.2%. The five worst performers were One IFCG1 (ONE-IFCG1), slumping 30.2%; Asset Plus Opportunity 1 (ASP-OPPORTUNITY1), tumbling 17.7%; One Spot 5/4 (ONE-SPOT5/4), losing 13.8%; SCB Trigger 3% Plus 3%D (SCBTG3P3D), plunging 13.6%; and SCB Trigger 3% Plus 3%B (SCBTG3P3B), dipping 13.5%. Kittikun Tanaratpattanakit, senior analyst at Morningstar Research (Thailand), said the 96 trigger funds raised 35.8 billion baht through initial public offerings. Some 27 trigger funds were unveiled in the third quarter alone. Only one Thai equity trigger fund successfully hit its target during the first nine months, while 17 global equity and seven oil trigger funds reached their targets. On average, China trigger funds fell 19%, Germany slumped 15%, Asia-Pacific plunged 14% and oil dipped 8%. www.bangkokpost.com/business/news/727788/trigger-funds-miss-mark-stay-popular |
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