Mutual Fund
What is a Mutual Fund
A mutual fund is a professionally managed investment fund that pools money from many investors to purchase securities as stated in the prospectus, to generate returns to the fund and average returns to unitholder in proportion to their investment in the fund.
Mutual fund is like an investment tool for investors who do not have time to track information of investment, have no investment experience and expertise in investment. The large mobilized investment fund will be managed by the professional fund managers in order to get the best return under a defined risk.
Therefore, mutual fund is like investing in diversified investment tools and suitable for investors who do not have time to track information of investment.
Workflow of a Mutual Fund
More details on Mutual Funds
Advantages of Mutual Funds
Types of
Mutual Fund
Advantages of Mutual Funds
Managed by professional management
By knowledgeable and experienced in investing fund managers who meet the criteria required by law. Their knowledge has to be reviewed every two years and registered with the SEC. Moreover, the asset management and the fund manager's competency have to be measured and proved in long-term from return of the fund compared to the benchmark index or compared to the return of the fund which is as same type as competitors in the same period.
Reduce investment risk with better diversification
Reduce investment risk with better diversification (Risk Reduction through Diversified Portfolio) since each fund will be invested in securities or assets issued by various issuers or corporates in many industries. If the price of securities or assets invested in the fund decrease, there may be other securities or properties which their prices increase to offset or reduce losses. This helps reduce the risk of investment. Compared to non-diversification investment, it may cause investors more losses if the price of single security or asset falls.
Alternative investment policy to choose
Alternative investment policy to choose (Alternative Portfolio Objectives and Risk Management) individual investors may have the same or different idea and passion in investment upon their psychographic, wealth, life cycle which suitable for short term or long term investment, desired goal achievement and their restrictions on the investment. Mutual fund is the diversified investment tool which has various investment policies and investment styles from highest risk to lowest risk. Interested investors are able to choose to invest according to their investment objectives and goals.
Save time and investment expenses
Save time and investment expenses (Time Savings in Investment Management and Administration) Mutual fund has systematic investment. That is, appropriate selection of securities or assets in theoretical way, continually tracking news and market situation, effectively selection of intermediary or broker trader, protecting the investors’ benefit and publishing the net asset value to investors regularly as required by law. Thus, the mutual fund allows investors to save time and the investment expenses.
High liquidity
That Investors can switch the investment units into cash easily when investing in the open-ended fund which allows for redemption. For example, when investing in bond or debt instruments such as corporate bond, the investor must hold that bond until maturity to receive the money back. While investing through the fixed income fund, the investors are able to redeem the investment units as scheduled such as daily, weekly or monthly, depending on each case with the redemption price is as announced.
Tax Benefit
Mutual fund is not tax unit hence the fund’s income has not to be paid for income tax. Mutual fund can convey all benefits to the unitholders better than investing on their own.
Mechanism to protect unitholders
The SEC is responsible for overseeing management of the funds, placing mechanism to disclose to investors the information they need to make investment decisions, and preventing investors being imposed. There also has a trustee to protect the interests of the unitholders.
Types of Mutual Fund
Money market fund
Fixed income fund
Mixed fund
Equity fund
Money market fund has a policy to invest in or hold debt securities, deposits, or other assets, or generated benefits by other means determined by the SEC, which are repayable on demand or are due for repayment, or remaining maturity not exceeding 397 days from the date of investment or signing contract and maintain portfolio duration in at any time, which does not exceed three months. This mutual fund type has the lowest risk suitable for short-term investment investor who does not want risk.
Fixed income fund with a policy to invest in specific deposit or securities or other assets or generated benefits by other means determined by the SEC, such as bonds or corporate bonds. But this type of fund cannot invest in equity or quasi-equity, semi-debt capital such as convertible bonds, unless permitted by the SEC. This mutual fund type has lower risk than equity fund and suitable for investors who are risk averse.
Mixed Fund (Balanced fund) with a policy to invest in specific deposit or securities or other assets or generated benefits by other means determined by the SEC. With the aim to maintain its investment in or holding of equity at any one time not exceeds 65 percent of the net asset value of the fund. Funds can be invested in all securities’ types. Fund managers can better explore opportunities to invest in both equities and debt markets. However, the allocation of investments is balanced because of restriction on the ceiling and floor investing in equity securities. Balanced fund type is suitable for investors who accept moderate risk.
Equity fund with a policy to invest in or hold securities on average in the fiscal year of at least 65 percent of the net asset value of the fund which has to report the equity holdings on a quarterly basis to the SEC. This type of fund is suitable for investors who accept high risk.
Long Term Equity Fund
(LTF)
Retirement Mutual fund
(RMF)
Foreign Investment Fund
(FIF)
Property Fund
 
Long Term Equity Fund (LTF) a mutual fund that invests in stocks. The authorities are encouraged to set up to increase the proportion of long-term institutional investors to invest in the stock market. Increasing institutional investors will provide Thai capital markets more stable. Individuals will receive tax incentives. LTF is suitable to all Individuals that want to invest in long term but may not have the expertise to invest in stocks. However, the investors must understand and accept the investment risk and conditions relating to the duration of the investment that require holding not less than seven calendar years.
Retirement Mutual fund (RMF) a mutual fund that aims to promote savings and investment of individuals to prepare for retirement with quality. Investors will receive more tax incentives than the general fund. Individuals investing in RMF will be exempt from personal income tax, according to the actual cost and maximum of 15% of taxable income each year. When combined with the contributions to the provident fund or pension fund (Kor.Bor.Khor.), investing in RMF shall not exceed 500,000 baht, continuation not less than five years since the first investment, and will be redeemed when the investor is 55 years of age.
Foreign Investment Fund (FIF) a mutual fund that aims to use the proceeds from the sale of units in the country to foreign investment. The Bank of Thailand has considered bringing money to permit foreign investment limit in each year. Mutual fund that invests abroad is the only way for investors in Thailand to diversify their investments more widely and reduce the investment risk. Companies that can manage funds that invest abroad must meet the SEC's approval due that foreign investment requires people with expertise in such matters in the fund. The investment policy of the fund to invest abroad may be one of the standards of the SEC, which are subject to risks and returns of different levels. Investors should consider carefully before investing depending on their risk and the expectations on return.
Property Fund is a type of closed-end fund raising capital from the public in order to invest in real estate or leasehold property such as office buildings, factories, etc. The fund will receive income in the form of rental from the property and then paid to unitholders in the form of dividends. Property Fund is a financial instrument which mobilizes savings and then invest long-term in real estate.