RETAIL FUNDS | Cesar Tordesillas, Thailand

Asset Plus Fund provides Thais with principal protection

Asset Plus Fund Management will launch a mutual fund who want to protect their principal while getting higher returns than on bank deposits or government bonds.


The open-end fund is structured to provide a good chance to get a 7-per-cent return a year, Pongpan Apinyakul, senior executive vice president and investment strategist, said yesterday.

It is an equity-linked, complex-return capital protection fund.

About 97 percent of the fund will be invested in Thai government bonds and 3 per cent in derivatives.

Government bonds yield about 3 per cent a year and will save the principal for investors.

About 3 per cent of the fund will be used to buy options from other fund managers whose credit rating is investment grade.

The return of the options is linked to the movement of the stock prices of three companies - CP All, the operator of 7-Eleven convenience stores, Charoen Pokphand Foods (CPF), a feed and food conglomerate, and PTT Global Chemical (PTTGC) - between July 18 this year and July 18 next year, the due date of the option contracts.

"If the stock prices of those firms go up or stay unchanged as of July 18 next year, investors will get a return of 7 per cent for the year. If one of those firms' stock price drops, the return will be zero," Pongpan said.

Those who keep their money in banks are unlikely to get a higher return as liquidity is flooding the market, driving interest rates down. Those holding fixed-income assets - government bonds - may get a return that is lower than inflation, he added.

Chutipon Auschavara-Nondha, senior vice president for investment product strategy, said the counter-party risks associated with the investment were the ability of the Thai government to pay debts and the honouring of contracts by the fund manager.

Thai government bonds are usually considered to be almost risk-free and fund managers rated investment grade are unlikely to collapse within a year, he said.

The minimum investment is Bt10,000 and the management fee is not over 1 per cent. The term is about one year - not less than 11 months and not more than 13 months. Investors will not get dividends.

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