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Post by Fletchsmile on Sept 12, 2016 12:03:16 GMT 7
The topic of saving money or investing for children comes up from time to time. Obviously there's more choice outside Thailand, but there can still be reasonable options here in Thailand, and sometimes it just isn't worth the admin of transferring money out of Thailand, particularly if you're looking to start with small sums, or opening accounts overseas isn't so conevenient for you. So I thought I'd share my recent experiences we did over the weekend. These were at TMB Bank accounts: - We opened some basic bank accounts for the kids. These were in the kids own names. All they needed was their Thai ID card (usually any kid over 7 has) or some other form of ID, plus tabian bahn. - We set up internet banking for them. Just the same as anyone else as they have their own mobile number - They couldn't have an ATM card. They need to be 15 for that - They could have passbooks and they signed their own names Mutual fund/ unit trusts: - We couldn't open in the kids' own name. - We couldn't open in the format "child name by father name" or "child name by mother name" - Instead what we had to do was just open extra accounts in their mother's name. So these aren't really their accounts per say, but by their mother having 3 separate accounts she can use them for different purposes/ people: 1 for her and 1 each for the kids - Documents required were just the wife's ID card and Tabian bahn - TMB apparently lets you open up to 3 accounts - I think I could have opened in mine name, but really preferred the wife's. I also don't want it counting towards my income in Thailand for any dividends or my inhertiance tax threshold in the UK. Hence the wife's name is better A lot of paperwork, and takes some time as expected in Thailand to set up, but not difficult Previously at Standard Chartered: Bank accounts - We have in the format "child name by father name" as well as "child name by mother name" - They also have internet banking Mutual funds/ unit trust accounts - We have in the format "child name by father name" as well as "child name by mother name" - The name of the unit trust accounts needs to match the bank account names for buying/ selling/ dividend purchases - I believe they no longer offer this option and format for kids though. The reasons for opening with TMB were: - convenience of the bank location - very close to home in Central where we go a lot - their systems: internet banking and mutual funds systems are better than Stan Chart. - Plus you can buy TMB's own funds online. In the future they are planning to let you buy other fund houses funds online - there's a wider branch network We'll still keep StanChart though, as: - We have Priority Banking there and a great relationship manager - It's already all set up and works OK, and we've used them for years. - Life goes round and its easier to leave in place than start again in the future. Also as regulations change we may not be able to open in the future. As now they don't do child by parent format any more - They have probably the widest range of funds of any bank as they don't sell their own - The downside is it's very manual and their systems aren't great + you can't buy or sell funds online, but they do send messengers to our home Cheers Fletch
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AyG
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Post by AyG on Sept 12, 2016 12:19:18 GMT 7
Did you consider ETFs as part of the scheme of things? And if so, why did you reject them?
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Post by Fletchsmile on Sept 13, 2016 17:52:28 GMT 7
I did consider ETFs. The main reason I rejected them in this case is the ETF choice from Thailand is very limited. What I am doing is saving a small sum each month for the kids, which is funded by income in THB from Thailand. I use ETFs occasionally offshore. But that is mainly for investments in my own name funded in currencies other than THB. The other thing about Thailand is I want to get them in the habit of using banks accounts, spending money, saving and all that. Having a Thailand account they can go and see someone in person as part of the education experience
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GavinK
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Post by GavinK on Sept 16, 2016 15:58:36 GMT 7
For the extra mutual fund accounts (max 3) assume these are all added/linked to the same TMBAM online id to access ?
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Post by Fletchsmile on Sept 17, 2016 13:19:03 GMT 7
For the extra mutual fund accounts (max 3) assume these are all added/linked to the same TMBAM online id to access ? I think so but haven't actually done that step yet. The driver for TMB systems is the persons ID number (Thai ID card number for Thais) so all 3 under the same ID will be under the same online access TMB is split into 2 sides: 2 log-ins: 1) for the bank - TMB Bank 2) for TMB AssetManagement - TMBAM For 1) TMB bank: - For the bank accounts with TMB bank, all accounts by the same ID are under the same internet login ID. So in this case i) My wife and kids all have their own bank accounts and separate log ins ii) because all the mutual funds are under my wife's ID are all 3 mutual fund accounts show under the same login ID she uses - For the mutual funds here you can see the value of all your bank accounts + mutual funds. Here you can transact on your bank accounts but not transact on mutual funds 2) For TMBAM - asset management side: - This is a separate login system under TMBAM. Haven't actually finished setting this bit up yet. Did the other stuff first to open it all up. - For the TMBAM side it's the opposite of the TMB bank side. Here you can see your TMB bank balance but not do banking transactions. Here you can buy/ sell online all TMB funds I have this set up for myself: TMB bank accounts + TMBAM for mutual funds. they work quite well together. I have only 1 account for mutual funds though in my name. Not sure if that's clear or sounds more complicated than it is: Summary A) Wife: 1) TMB Bank - login - all bank accounts in her name - all 3 mutual funds in her name 2) TMBAM - login not done yet B) Children 1) TMB Bank - login each using their ID 2) TMBAM - no account or login as they are too young to have this and is in the wife's name As I mentioned takes some time to set up - Thailand and paperwork and all that. Oce up and running though very easy. Cheers Fletch
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Post by Fletchsmile on Sept 17, 2016 16:45:53 GMT 7
OK on the TMBAM mutual funds, we've just got round to doing it for online. They send you a temporary used ID and a password separately by registered mail and you go to the website to complete the process: www.tmbam.co.th/v6/en/index.phpThey have sent 3 separate temporary user IDs and 3 separate passwords for the accounts by default. So by default that would be 3 log-ins. However, after lunch today we dropped into the local bank branch where we set up all the accounts. I asked if you need to use 3 separate IDs. They said you can set up with 3 separate log-ins. Or she said that if we want we can set up with 1 main account and add the other 2 mutual fund accounts to it. This is what we want. So looks like you can choose: 3 separate mutual fund ID log-ons or 1 log-in for all. Up to you
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Post by Fletchsmile on Sept 17, 2016 17:28:43 GMT 7
We just did the main account at TMBAM funds online. Very easy. Just go the link input the temporary user ID and password. Then it prompts you to change the username and choose a new password. Very quick. Done now.
So just need to go back and ask how to link the other 2 accounts to that log-in as looks like we can't do that ourselves online it seems.
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Post by Fletchsmile on Mar 7, 2018 15:06:56 GMT 7
I took the decision recently to sell all mutual funds we had in the kids's names held via SCBT/Tisco. Since Tisco bought out SCBT, we've had numerous hassles with Tisco, and they really aren't geared up for dealing with children. Prior to the takeover, I already substantially emptied their bank accounts
- With SCBT we held in the format "childs name by fathers name". Tisco does in the child's name only, and this led to a lot of difficulties with their systems, our holdings, links to bank accounts, dividend receipts etc.
- After nearly 6 months we still have some funds missing in Tisco's system that don't show up in Tisco's estatement for the girls
- Tisco doesn't have internet banking. Only read only e-stament. So we can't easily move money between accounts. Parent to child/ back again etc. Tisco also doesn't allow children to have mobile banking. Children also can't have an ATM card. This basically means it's a pain in the a**e to do anything, and particulary get money out. The only way is to visit a branch.
- Even visiting a Tisco branch is a hassle. Who can sign, what ID is needed etc. Last time they insisted on my original passport to withdraw cash from my daughters accounts which are in their name only. I had their passports, their ID cards, my driving licence (with passport number on it) - copy of my passport on USB etc, but they didn't want any of that, just my passport only. At TMB the girls just go to the counter with their ID and passbook to pay in/take out.
- Our RM wisely left as they realised Tisco is lightyears behind SCBT. SCBT's systems were poor, but workable with Priority Banking and a good RM who'd looked after us for many years. Tisco's systems are worse.
So basically, we have sold all the kids' mutual funds held via Tisco and will move the funds elsewhere. Short term most of it will go into our offset mortgage account with Tisco, but longer term I'll be looking for alternatives.
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Post by Fletchsmile on Mar 7, 2018 15:17:13 GMT 7
Some of the proceeds from selling all the girls' funds with Tisco will go into the TMB accounts we've set aside for the girls as in the opening post on this thread. These are basically: - under the wife's name for the mutual fund accounts. She has 3 mutual fund account numbers: 1 for her and 1 for each of the girls - in children's name only for the savings accounts with passbook. They also have internet banking in their own names linked to their own mobile phone numbers. So while they aren't old enough for an ATM card yet, we can just simply transfer online to a parent account and they take out via their ATM.
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Post by Soutpeel on Mar 7, 2018 15:33:41 GMT 7
Jeez...i have just a money box for my wifes relatives child...and i putting my change in it for him...
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Post by Fletchsmile on Mar 7, 2018 15:46:31 GMT 7
I was looking at TMB's offerings again on their mutual funds. They've expanded their product range quite a bit in the last couple of years. They have a particular focus on index funds, but also a few other funds of interest. TMBAM's systems are OK and link well to TMB Bank accounts. To date you can only buy TMBAM funds online and for their other offerings such as UOB, Aberdeen etc, you need to visit a branch All in all they offer a reasonable simple for solution for someone building a simple portfolio in Thailand. As above we have set this up for our daughters. 4 basic core holdings in their portfolios: TMB SET50 fund = Thai equities, - SET 50 Index tracker - Total Annual Fees: 0.63 p.a. - No front end or back end fee. Current bid-offer spread of only 0.1% www.tmbam.com/home/en/mutual-fund-detail.php?f=392TMB World Equity Index Fund = Global Equities- Lyxor UCITS ETF MSCI WORLD Index tracker - Total Annual Fees: 1.11% p.a. - No front end or back end fee. Current bid-offer spread of only 0.1% www.tmbam.com/home/en/mutual-fund-detail.php?f=144TMB Emerging Markets Equity Index Fund = Emerging Market equities, - iShares MSCI Emerging Markets ETF - Total Annual Fees: 1.10% p.a. - No front end or back end fee. Current bid-offer spread of only 0.1% www.tmbam.com/home/en/mutual-fund-detail.php?f=145TMB Property Income Plus Fund = REITs, property sector- a fund with a few threads already on BigMango - Total Annual Fees: 1.19% p.a. - 1% front end fee. No back end fee. Current bid-offer spread of only 0.1% www.tmbam.com/home/en/mutual-fund-detail.php?f=423Between these 4 that gives exposure to Thai equities, global equities and EM equities as well as property, for a reasonable cost and reasonable start for a long term portfolio for the girls future Only 1 of the 4 has a front end cost of 1%. None have back end costs Bid-offer spread only 0.1% Annual % costs are around 1% p.a. Sure there are cheaper ETFs/ Trackers/ Funds offshore. But this is part of a simple reasonable cost portfolio onshore for kids. If starting for kids with small monthly amounts, it works OK. Offshore would be more admin, tax considerations, FX costs to move money offshore and potentially back, less convenient etc. Also on small amounts monthly amounts makes more sense
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AyG
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Post by AyG on Mar 8, 2018 10:10:16 GMT 7
A very sensible portfolio in my opinion. You don't mention the asset allocation. I presume it's 25:25:25:25. At least, that's what I'd go for with this portfolio. However, it does illustrate some issues:
Charges The total annual charges are actually higher than TMBAM states since they don't include the charges for the underlying ETF. For example, in the case of Emerging Markets Equity Index Fund the cost of the ETF is 0.69%, so the total charge is actually 1.79% (1.10% + 0.69%). That's pretty outrageous for a simple trackers.
Investments By buying a tracker one buys the bad with the good. Looking fund by fund:
TMB SET50 fund: There's a very high allocation (17.5%) to PTT, PTTEP and PTT Global Chemical. You're also buying into companies with corrupt, self-serving management.
TMB World Equity Index Fund: There's not a lot wrong with this one, provided one's happy with an allocation of 59% to the USA. Personally I prefer a more equal weighting between USA, Europe, Asia-Pacific. It spreads the risk.
TMB Emerging Markets Equity Index Fund: There's a high allocation to China and Hong Kong (29%) and a high allocation to Internet firms such as Tencent (5.67%), Alibaba (3.83%) and Baidu (1.26%). (These stocks are on extremely high P/E valuations, plus Internet firms come and go with great rapidity. Where are Alta Vista and Napster now? Even Yahoo! is on its death bed.)
TMB Property Income Plus Fund: My problem with this fund is its opaqueness. When are dividends paid? How much currency hedging is being done? How much turnover in the underlying equities is there? I don't like investing in closed boxes. This closed box also appears to be boosting its income at the expense of capital appreciation. The income is also taxable. An accumulation fund would be better.
What Might I Have Done Differently (within the constraints) Rather than the SET50 fund, I would have considered TMB Thai Equity CG Fund which only invests in companies with good corporate governance.
I would add TMB Global Infrastructure Equity Fund. Like the Property fund, this acts as a hedge against inflation, i.e. it an income (albeit in this case one that's rolled up into capital, so avoids income tax) which should rise in line with inflation. What is frankly bizarre in this case is that the underlying fund is USD-hedged. One is paying for the hedging, and at the same time taking on USD/THB exchange rate risk, rather than risk against a basket of currencies. An unhedged version of the fund would have been preferable.
I would also give serious consideration to a small (perhaps 5%) allocation to TMB Gold Fund.
Anyway, that's my 2 baht's worth, FWIW.
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Post by Fletchsmile on Mar 13, 2018 12:29:39 GMT 7
Thanks for the input and feedback AyG. Appreciated. A couple of follow ons to the points you raised. On charges: It's common practice to have controls in place to prevent the double charging you refer to on feeder funds. TMB's documentation is often a bit weak and often only in Thai for some stuff which is time consuming. 2 of the 4 funds as you mention have the potential for double charging: the EM fund and the World Markets Fund. I haven't pinned it down exactly yet in TMB's literature and it may be slightly different for ETfs, but a few things why I think the double charging you mention may not apply for these 2 feeder funds: - Aberdeen's documentation is much clearer than TMB, but here's an example of the common practice of avoiding double charges on feeder funds. www.aberdeen-asset.co.th/static_files/documents/db6e752d-dc5b-4db6-9d11-28278fc32603/12/57356-cd-abgem_en.pdf- The fund charges quoted by TMB are higher than the underlying fund charges, which again leads me to believe they incorporate the underlying charge in their number. On choice of Thai FundAt this stage I wouldn't touch the TMB Thai Equity CG Fund you mention . I actually considered the fund, as I've been very happy with UOB's actively managed Good Corporate Governance fund, and thought it might be similar. Key reasons I wouldn't touch TMB Thai Equity CG Fund at this point in time, and why I would prefer the tracker: - TMB Thai Equity CG has only been running for just under 6 months. Its track record is therefore unproven as a fund. - TMB as a fund management house aren't known for their active management expertise either. It's not an area of strength generally for them. Their past strategy has focused on passive funds. Its also a relatively small fund management house and less well established as a player. Nor could one view them as say a UK niche and nimble fund manager who may have advantages over say UK larger more established houses - the parallels just aren't there and nor is the history - The little track record it does have, TMB Thai Equity CG has significantly underperformed the index and the TMB SET50 fund since its inception. Using TMB's comparison tools you can see here. www.tmbam.com/home/en/mutual-fund-comparison-result.phpOn the exposures of the index fund to PTT and related group, this is very common among Thai funds as PTT and group make up a large % of the fund. Something an investor in Thailand has to be mindful of but largely has to live with. Often when you are looking at why some Thai funds do better than others, PTT companies exposure is a factor. When they are doing well those funds with larger exposures benefit, and tough times they do worse. To exclude them completely though is significantly limiting choices. So all in all I wouldn't touch TMB Thai equity CG fund at this point I also looked at the main holds for TMB CG compared to UOB Good Corporate Governance fund. UOB which has been consistently one of the best active managed funds of the last decade or so has around 8%. For TMB, PTT doesn't even feature in the top 5, so is definitely under 4% if in there at all. I would put significantly more faith in UOB's choices compared to TMB www.uobam.co.th/srcm/fund_mapping/mkadqykx4/qy/kx/o0x0/CG-LTF_eng_201801.pdf
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Post by Fletchsmile on Mar 13, 2018 12:53:48 GMT 7
TMB Property Income Plus Fund: My problem with this fund is its opaqueness. When are dividends paid? How much currency hedging is being done? How much turnover in the underlying equities is there? I don't like investing in closed boxes. This closed box also appears to be boosting its income at the expense of capital appreciation. The income is also taxable. An accumulation fund would be better. What Might I Have Done Differently (within the constraints) Rather than the SET50 fund, I would have considered TMB Thai Equity CG Fund which only invests in companies with good corporate governance. I would add TMB Global Infrastructure Equity Fund. Like the Property fund, this acts as a hedge against inflation, i.e. it an income (albeit in this case one that's rolled up into capital, so avoids income tax) which should rise in line with inflation. What is frankly bizarre in this case is that the underlying fund is USD-hedged. One is paying for the hedging, and at the same time taking on USD/THB exchange rate risk, rather than risk against a basket of currencies. An unhedged version of the fund would have been preferable. I would also give serious consideration to a small (perhaps 5%) allocation to TMB Gold Fund. Anyway, that's my 2 baht's worth, FWIW. TMB Property Income. I agree it has it's imperfections. However, notably you and I have both owned this fund for a couple of years While it could be more transparent and less opaque, performance has been good, and the property exposure is a very useful for diversification. The issue of currency hedging or not is minimal. I don't believe it does. But investments are mainly either SGD or THB so no big deal, given the strong correlation between SGD and THB. There isn't currently a normal accumulation fund, except the RMF version (I hold among my RMFs). No big deal there isn't, and I'm somewhat indifferent. The girls don't suffer tax / WHT on the amounts involved. TMB gold fund
The girls actually used to own a small % of TMB gold fund as you suggest via Tisco. Dating back to GFC times. However, as we've now sold it, I probably won't bother to reinvest. I'd rather stick with mainly equity funds given the longer term investment horizon for kids and see less need for insurance/hedge etc. If anything it has also been a drag on performance over the last 10 years, and the key really is return rather than volatility given we're still looking 10 years+, plus while a crisis will hit again at some point I don't think it will be so finance sector orientated next time, and less likelihood of the global financial sector collapsing. On the world equity fund I share your thoughts on the allocation to US being high. That's why the Tisco funds were useful we had more choice. So as you say, as money comes in from Tisco and we move it to TMB, I'll look to add more Europe and Asia exposure. On the infrastructure fund, I agree and again something we're interested in and will look more when Tisco proceeds are available. (For now we're going thru the laborious process of collecting checks, depositing them, issue with the names on the cheques etc so admin will take a while). I hadn't seen about the USD hedge you mention. Puts me off a bit with USD issues at the moment, I'd prefer not to be hedging into USD Thanks again
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Post by Fletchsmile on Mar 13, 2018 13:02:59 GMT 7
So for now the 4 main core funds are TMB SET50 fund = Thai equities,TMB World Equity Index Fund = Global EquitiesTMB Emerging Markets Equity Index Fund = Emerging Market equities,TMB Property Income Plus Fund = REITs, property sectorbut I'll be looking to add a few satellite funds and tweak these though. More European and Asian equity exposure (although noting for Asia not to double up too much given EM and Thailand already) As AyG says maybe add Infrastructure fundAnother fund I've been looking at is a multiasset style fund TMB Global Real Return Fund: www.tmbam.com/home/en/mutual-fund-detail.php?f=453Again another feeder fund, with master fund objective: www.tmbam.com/pdfs/I14_master_en_02.pdfI don't think OECD CPI will be very high, but targeting 5% above that net of fees isn't a bad return at all if achieved. It also fits nicely with keeping pace with inflation if the girls study overseas in the future. The focus on a complete market cycle also fits with the long term objective for the girls' portfolios
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