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Post by francois on Dec 7, 2015 12:21:38 GMT 7
This may be a little off topic...
So we were talking about setting up a simple core portfolio from Thailand for people who are still quite inexperienced in this area.
In many of the posts and replies people talked about the necessity of investing in Thai equities, exposure to SET and the THB.
Wonder if someone could elaborate a bit on this? Why is this important?
And...
I'm not an expert, but i do not have much faith in the Thai ecenomy, not with the way things are going now. I dont see many of the needed structural reforms happening to raise competitiveness , education is poor... Im sure we're all aware of the challenges .
Quite naturally this would make me reluctant to invest in Thai economy... Or is this faulty thinking? Is this actually an excellent opportunity to invest in Thai equities?
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AyG
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Post by AyG on Dec 7, 2015 12:52:14 GMT 7
If you're living in Thailand most of your expenditure will be in Thai baht. The value of the baht will rise and fall against other currencies. The local inflation rate will also vary over time. By investing in the SET:
(1) You have investments and income in THB, so there's no foreign exchange rate risk. (FX rates are very volatile, and a swing of 30% in a year between any currency pair is a fairly common event. And look at how the Brits who moved here when they got 70 baht for their English dollars winge and whine now that they only get 50.)
(2) You have investments that will (it is hoped) will rise in value when inflation is high. In other words, when inflation is high companies can charge more for their products/services, and (possibly) make more profit causing the share price to rise. This (at least in theory, and probably only partially) protects you.
There are plenty of reasons not to invest in Thailand, so I wouldn't go overboard. Somewhere between 10% and 20-25% is probably right for most expats who intend to be here for a long time.
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Post by Fletchsmile on Dec 16, 2015 11:14:13 GMT 7
This may be a little off topic... So we were talking about setting up a simple core portfolio from Thailand for people who are still quite inexperienced in this area. In many of the posts and replies people talked about the necessity of investing in Thai equities, exposure to SET and the THB. Wonder if someone could elaborate a bit on this? Why is this important? And... I'm not an expert, but i do not have much faith in the Thai ecenomy, not with the way things are going now. I dont see many of the needed structural reforms happening to raise competitiveness , education is poor... Im sure we're all aware of the challenges . Quite naturally this would make me reluctant to invest in Thai economy... Or is this faulty thinking? Is this actually an excellent opportunity to invest in Thai equities? This raises a few key points: why equities? why THB exposure? and the Thai economy related to equity returns? For a few of the reasons I actively seek to have THB exposure and specifically THB equity exposure: 1) Equities - Over long periods on average returns on equities tend to outperform bonds, which tend to outperform cash. Although it should also be remembered they tend to be higher risk - Of these 3 categories equities is the main one with potential for growth in income. Cash tends to pay a fixed rate. Bonds usually pay either a fixed rate or referenced to a benchmark that goes up or down. eg if someone picked a high quality blue chip stock they will see dividends have grown over the past few decades, cash rates go up and down, as do bond rates - Equities provide the best potential for capital growth. Cash will not provide capital growth and only income. Bonds will fall and rise and the capital value will change according to various factors like interest rates, but capital doesn't really grow. Equity prices will go up and down, but over time the value of companies tends to grow (notwithstanding some fail, go bankrupt etc). - As such because of the potential for growth in value, they have the best chance of keeping pace and outperforming inflation - In the last few years in particular cash rates have been very poor and barely keep pace with inflation 2) THB - If someone has THB liabilities and / or THB expenses then if they are paying for these with a foreign currency then they have currency risk, as the value of say GBP vs THB goes up and down. This can work in your favour, but can also go against you. For example in the last 10 years GBP has lost over 20% of its value vs THB, going from around 70 to mid 50's. So for someone funding their life in Thailand it costs 20% more - These may be specific liabilities such as school fees or just general living expenses. eg on specific fees for me I've several million THB to fork out in school fees in the next 10 years or so. Hence if I invest in THB equities I don't care which direction the THB goes. If I bought UK equities then I could have lost over 20% in value in currency terms over the last 10 years alone, as the GBP goes down in value. So I'd need to make an extra 20% to compensate for that. Additionally the school fees rise at around 4% a year. Cash doesn't pay that, so I need something that will grow in line with liabilities. We also of course have day to day expenses in THB for general living. There are plenty of examples of the impact of these, and combining these two factors can make the difference between being able to afford to remain in Thailand or not. Or certainly affect some people's quality of life. If you go back several years, you'd often see on Thai forums people saying "keep your money in the UK where it's safe", "keep it in GBP a real currency", "don't put it into equities, keep it in cash" People were saying you could retire and live in Thailand off a pot of GBP 150,000 earning 6% interest on cash when the exchange rate was 70. That's GBP 150k @ 6% = GBP 9,000 per year interest. GBP 9,000 a year x 70 = THB 630,000. or over THB 50k a month What happened? Interest rates on cash fell to more like 2%, so their income stream was cut by 2/3s; and then to add insult to injury they lost a further 20% or so on currency revaluations So GBP 150k @ 2% = GBP 3,000 per year interest GBP 3,000 x 55 = THB 165,000 or THB 13,750 per month. THB 13,750 really isn't enough for most people to live the life they want here. Then when you factor in say 10 years of inflation that THB 13,750 is worth less today than 10 years ago. Even at 2% pa. inflation it becomes worth closer to THB 11k a month Of course life could have gone the other way. Rates could have doubled and GBP strengthened. If it did then there'd be no problem at all. The key point about currency risk, interest rate risk, income risk etc is protecting yourself against events or changes that will disrupt your life 3) Economy It's valid to be concerned about Thailand's economy. It's harder to map this directly to quantitative numbers though. But: - Look back over the last 15 years of this century though and Thailand has frequently had times of difficulty but pulled thru. Equity prices can fall significantly by ball park 40% in worst years but have rebounded over time. During that we've had coups, global crises, domestic crises etc - It's always difficult to predict timing of stock market rises and falls. While someone might think they should be correlated with the economy or GDP, what people find in practice is that the stock market leads or lags the economy, and it becomes much more complex. Trying to time the market is difficult at the best of times, trying to time it just based on economy is even more difficult - If I look at growth rates while Thailand does have it's problems, but you'd expect growth to be higher than developed countries like say UK or Europe over the next decade. What happens if Thailand does really well and your home country does badly? People here's lives move ahead cost of living goes up and yours risks not moving ahead or even going backwards in relative terms. On the other hand if Thailand does badly relatively so does everyone else, so it's not too bad. These are risks to bear in mind. - There's a lot more could be written on the economy side of things and stock market. This is another reason though that it pays to diversify your investment between different countries, economies, etc. So although people can make educated guesses, no-one knows exactly what will happen with all these factors, let alone when things will happen. Things can go both ways. If they go fine or in your favour then no problem. But protecting yourself against things that could go wrong, eg having some THB currency to address currency risk, equities to address inflation risk etc, are important strategies to be aware of, if life doesn't go in your favour. Or think of them as a kind of insurance against risks that could happen and cause you problems.
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AyG
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Post by AyG on Dec 16, 2015 13:13:26 GMT 7
Just a couple of minor points: For example in the last 10 years GBP has lost over 20% of its value vs THB, going from around 70 to mid 50's. So for someone funding their life in Thailand it costs 20% more Actually, it's rather worse than 20%. 1,000 baht @ 70 is £14.29. 1,000 baht @ 55 is £18.18 - that's 27% more. And the reality is actually worse. Sterling went above 70 and fell to around 43. Hence if I invest in THB equities I don't care which direction the THB goes. This is rather an over simplification. Many things in Thailand are imported - particularly raw materials and oil/gas. These are typically priced in USD. Personally, one of my largest expenses is electricity, much of it made from imported oil and gas (and in future increasingly coal), so the THB/USD exchange rate is of concern to me. Similarly, Thailand exports finished goods and the price of these (and so their desirability) is affected by foreign exchange rates. As John Donne would have written had he been an economist: To me this means one needs to look beyond one's home economy for the totality of one's investments. Think about investment in the rest of one's continent (or more specifically neighbouring countries which are economically linked), and in the rest of the world.
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Post by Fletchsmile on Dec 16, 2015 13:51:51 GMT 7
Just a couple of minor points:... Hence if I invest in THB equities I don't care which direction the THB goes. This is rather an over simplification. Many things in Thailand are imported - particularly raw materials and oil/gas. These are typically priced in USD. Personally, one of my largest expenses is electricity, much of it made from imported oil and gas (and in future increasingly coal), so the THB/USD exchange rate is of concern to me. Similarly, Thailand exports finished goods and the price of these (and so their desirability) is affected by foreign exchange rates. As John Donne would have written had he been an economist: ... Even then that oversimplifies... as companies will have FX exposures in addition to just the FX transaction risk on prices mentioned, eg FX translation risk (on accounting policies, historic cost vs current cost etc), as well as economic FX risks such as what suppliers/ competitors / customers do and impacts on them. Not to mention companies will use hedges, eg you think your company benefits from a lower oil price priced in USD but they have taken out derivatives contracts to lock in certain rates... and so on... The key principle though is having taken some action to mitigate FX risk (knowing it will never be perfectly eliminated) I don't care which direction THB goes , so I'm no longer concerned about it
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Post by Fletchsmile on Dec 16, 2015 14:05:25 GMT 7
Just to share experiences: I opened a mutual fund account at TMB Head Office in Bangkok this morning (Chatuchak). Very easy process, took around 15 minutes. To open they wanted: - Copy of passport and Visa - Copy of Work Permit (everyone always asks for that, but if not working they usually don't bother or ask for something else) - Copy of first page of my savings account with them (as I'm an existing bank account customer, just not for mutual funds) Signed a couple of forms, including a slip to transfer money into the fund from my savings account, and a risk assessment form. Although I just told them to put me down as the highest risk level and experienced investor. Received an sms within the hour to say thank you for investing with them, my account ending in -XXXX is now ready to use They said that they issue a fund book with all funds purchased, whether TMBAM funds or not, eg UOB, Manulife etc as well. This is a somewhat dated practice in my view as if you have online plus you receive a statement there's no need for a book. They said customers like it. Goes back to the days I guess where people have nice passbooks They will also set up so I can buy/ sell online. At this stage only TMBAM funds can be bought online. The others like UOB, Manulife need to be done by filling the forms in, although they expect them to be available online too at some point. So all in all very easy process. That said I did know what I wanted, and it was via Wealth Banking at Head Office (Thru the bank, not thru TMBAM) I'll still be keeping the accounts with Stan Chart for their wider range and as a Priority Banking customer, but it's nice now to have an alternative and an online option.Things often seem to crop up in Thailand and things change, so having more than one bank is useful. Plus none are best at everything.
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AyG
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Post by AyG on Dec 16, 2015 14:20:23 GMT 7
They said that they issue a fund book with all funds purchased, whether TMBAM funds or not, eg UOB, Manulife etc as well. This is a somewhat dated practice in my view as if you have online plus you receive a statement there's no need for a book. They said customers like it. Goes back to the days I guess where people have nice passbooks I must say a fundbook sounds like a good idea, though I don't have one for my TMBAM account. The information available online is (to be honest) pathetic. There's no transaction data before the last 7 days - simply position current value, %age gain/loss. No original cost, no number of units purchased. I'm having to maintain my own transaction records manually.
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Post by Fletchsmile on Dec 24, 2015 16:19:35 GMT 7
They said that they issue a fund book with all funds purchased, whether TMBAM funds or not, eg UOB, Manulife etc as well. This is a somewhat dated practice in my view as if you have online plus you receive a statement there's no need for a book. They said customers like it. Goes back to the days I guess where people have nice passbooks I must say a fundbook sounds like a good idea, though I don't have one for my TMBAM account. The information available online is (to be honest) pathetic. There's no transaction data before the last 7 days - simply position current value, %age gain/loss. No original cost, no number of units purchased. I'm having to maintain my own transaction records manually. I just logged into my new FundlLink Onine account with TMBAM for the first time. It's far better than what I have with StanChart. Very easy to navigate round too. Stanchart basically shows my holdings, current value, profit and loss (since they set up their online system which is meaningless to me as I bought before they had this), and I can go back one year for transactions. Very basic. Read only. TMBAM on the other hand, I can set up purchases / redemption plans / buy and sell online, create an investment plan, print LTF/RMF certificates, suitability test and do far more. For the "last 7 days" you mention that's only "recently processed transactions". Have you tried using the "inquiry function"? Hover over "My Account" then click "Inquiry". There you can select to look at "My statement" for a fund or "My passbook" for a fund? On "my statement" for example for a fund it will let me enter dates as early as 2005 for all transactions on a fund. Obviously I only recently set it up, so don't have anything that far back. But I didn't get an error message when trying which suggests I should be able to do. It shows: order date, effective date, trade date, purchase or sale, amount, number of units, investment value, unit balance, price and channel purchased. It sounds like that is what you're looking for Cheers Fletch
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Post by Fletchsmile on Dec 29, 2015 14:42:02 GMT 7
They said that they issue a fund book with all funds purchased, whether TMBAM funds or not, eg UOB, Manulife etc as well. This is a somewhat dated practice in my view as if you have online plus you receive a statement there's no need for a book. They said customers like it. Goes back to the days I guess where people have nice passbooks I must say a fundbook sounds like a good idea, though I don't have one for my TMBAM account. The information available online is (to be honest) pathetic. There's no transaction data before the last 7 days - simply position current value, %age gain/loss. No original cost, no number of units purchased. I'm having to maintain my own transaction records manually. As per the post above use the "inquiry" function. Just tried it now and it will definitely go back more than 7 days and it has all the history, number units purchased etc.
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Post by Fletchsmile on Mar 25, 2016 15:22:23 GMT 7
Just as an update on this: I've had my account at TMBAM for 3 months now using their Fundlink Online platform. They seem to have put quite a bit of thought into it, and have been continuing to improve it. The platform doesn't have the sophisticated functionality of someone like Hargreaves Lansdown in UK. But relative to Thailand it seems a leader in its field. I can do most basic things I want online relating to their TMBAM funds, like buy sell, set up plans, see portfolio etc. and it links to my TMB bank account. This cuts out the need to deal with bank/ asset management staff, and makes it very easy to manage basic buys, sell etc. So far I like it. Unfortunately it doesn't extend to funds that TMB are agents for outside TMBAM, eg UOB, ManUlife etc. These have to be bought manually thru a branch. Hopefully that will follow at some point later. I'll still be keeping my accounts with StanChart, where I have Priority Banking and a personal RM, which is a big plus. StanChart has probably the widest range of funds in Thailand, but it's all manual and their systems are way behind. Cheers Fletch
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Post by Fletchsmile on Jan 19, 2017 15:33:43 GMT 7
I attended a seminar for TMB/ TMB Asset Management TMBAM customers yesterday as a customer which reminded me of this thread.
They suggested someone could build a core portfolio around the following funds.
-TMB Jumbo 25 = Thai equities -TMB TMBMPlus = Thai fixed income/bonds
-TMB Global Quality Growth Fund = International Equities (a feeder into Wellington Global Quality Growth Fund) -TMB Global Income Fund = International Fixed Income (a feeder into PIMCO GIS Income Fund)
-TMB Property Income Plus - Property Fund - we've discussed on various threads here
20% in each fund, or tailoring it better to age/ risk attitudes etc
A sophisticated investor could obviously improve on this by going offshore, wider choice etc, but it struck me as a reasonable starting point for a core portfolio from Thailand for someone starting out.
Once the account is opened it could all be done online as all are TMB funds. You can also set automatic investments on a regular basis
I liked what I saw of the TMB Income/ PIMCO fund. It uses a wide range of fixed income instruments. It wasn't around when we started this thread in Thailand I think, which left a bit of a hole, but I'd prefer it to TMB Global Bond Fund (feeder into Templeton) we mentioned before and looks a reasonable offering.
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AyG
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Post by AyG on Jan 20, 2017 9:45:09 GMT 7
Just a few observations:
If investing for 5+ years (as any such investment should be), it makes sense for Thai taxpayers to go for an LTF version of a fund where available. In this case only the Jumbo 25 has an LTF version.
From a tax point of view (as I understand it, and I could be wrong) it's usually better to go for a fund which accumulates, rather than distributes income (even if a non-taxpayer*).
TMBAM pays out all income to a bank account; there isn't (to the best of my knowledge) a way for income automatically to be reinvested. This requires careful monitoring - particularly since TMBAM dividend payments are very unpredictable**.
The Thai equity exposure is very concentrated. The Jumbo 25 fund has 13.5% in PTT, 4.9% in PTTEP, 1.9% in Thai Oil. That's a lot of oil exposure. There's also 3.6% in PTT Global Chemical, so more exposure to the PTT group. Better, in my opinion, to go for something a bit more diversified wrt Thailand. Even the SET 50 would be a step in the right direction.
For the funds with foreign currency exposure TMBAM's hedging policies are very unclear. The decision whether or not to hedge, and how much, is left to the discretion of the local fund manager. This leaves considerable doubt over the FX risk being taken on board. As such, the overseas investments may not suit all investors (particularly conservative ones).
* Since income is reinvested immediately within the fund.
** TMBPIPF (Property Income) is a case in point. It had appeared to be settling down into paying 3 monthly. However, the anticipated January dividend, which I'd expected to be paid by now, hasn't been announced, and looks like it's not coming.
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Post by Fletchsmile on Jan 20, 2017 11:26:25 GMT 7
You're right that an LTF version might be better for a tax payer if they are holding longer term. I actually hold a small amount of the Jumbo 25 LTF fund.
RMFs are also worth considering for a tax payer. The holding period is to at least age 55, and the rules more complex but worth considering. I hold TMB Property Income Plus RMF myself, the RMF version of the same fund.
You're also right to be careful on dividends. From a tax perspective most people will not be worse off with an accumulation/ no dividend version(considering Thai tax only and not tax possibly payable elsewhere based on individual factors/ nationality etc).
If someone elects a dividend version, it can be convenient in some cases. They can elect to pay a flat 10% WHT tax - therefore a 10% loss on the dividends (say 3%) or say 0.3% annual decrease in return which can mount up when compounding. Or they can elect to pay tax at their marginal rate of tax. This is fine if someone doesn't pay income tax, if say their Thai personal allowances would cover the dividend income. So generalising, someone won't be better off with a dividend version but could be worse off they they pay tax and their allowances don't cover the income
Personally I would prefer UOB Good Governance LTF to the TMB Jmbo 25 LTF which is somewhat passive. UOB GG LTF doesn't pay dividends, so if I want "income" (more accurately cash) I just sell units to generate profit. It also can't yet be bought online thru TMB/TMBAM but can be bought thru branches of TMB bank as can all the other funds
PTT Group as you say makes up a large proportion of the Thai index. Depending on a fund mandate this can affect performance. Some passive funds obviously do well in good years for resources (like last year), a factor why Jumbo25 did well in 2016 - better than UOB CG. Other funds like Aberdeen I remember in past years sufferred in such years because they used to have a cap of 10% in any one holding so were forced to miss out in good resource stock years but cushioned in bad years. Someone like Bualuang Top10 is very flexible. It's concentrated but then again you are deliberately paying for their views. They will even overweight PTT relative to index. They've a great history of getting the calls right
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Post by Fletchsmile on Mar 7, 2018 15:54:18 GMT 7
This thread on post #10 for savings and investments for kids could make a reasonable starting core portfolio to build around for long term investment at a reasonable cost: Thai equities, Global Equities, EM equities and Property fund. Difficult to find decent bond funds in Thailand bigmango.boards.net/post/151892/thread
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Post by Fletchsmile on Jun 25, 2019 14:24:17 GMT 7
I was just revisiting this. For onshore Thailand choices, most of the opening post remains valid. Unfortunately StanChart Thailand no longer offer any services for retail investors in this area. I had a long and useful relationship with them, and they were our primary Thai financial institution for me, my wife and kids. So it was disappointing and a hassle when they sold out to Tisco I've retained many of my holdings with Tisco, but haven't added to them, and as I require money in Thailand slowly wind them down. Unless the funds are from Tisco Asset Management, i.e from the same group as Tisco bank, then the ability to do much online is limited. This is common for Thai banks, where only their sister asset management company has much online facility My new Tisco RM is ex-Stan Chart and she deals with the Tisco limitaions quite well. I emptied most of the accounts with Stan Chart for kids. I've been OK leaving the funds in my and my wife's name. Haven't bothered to move them, though I may do at a later date. But wouldn't add to much at all thru them A better option would likely be Citibank, which offers a range of fund management houses. That's also where my previous StanChart RM went rather than stau at Tisco. So at some point opening an account with Citi may be likely and I'd ask for her as an RM if still there. Transferring Tisco holdings is also a possibility. Citi has two levels of service above the mass retail cattle class, which get you a dedicated Relationship Manager: Citi Prority. For clients with THB 1mn to 5mn www.citibank.co.th/en/citi-priority/question-answer.htmCitigold for clients with THB 5mn+ www.citibank.co.th/en/citigold/contact-us/index.htm
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