Slim inflows into extra SSF units are due to lacklustre sentiment and the long lock-up period, according to Morningstar.

Morningstar cautions to wait until June

Slim inflows into the extra units of the Super Savings Fund (SSF) are due to lacklustre investment sentiment and the lock-up investment period, says Morningstar Thailand.

Total investment inflows into the SSF extra units totalled 1.5 billion baht in April.

In March, extra SSF units with a total asset value of 60 billion baht were prepared by 13 asset management companies, aiming to help shore up investment volume in Thailand’s stock market, said the Association of Investment Management Companies (AIMC).

The cabinet in March approved a raft of measures, including allowing investors to receive an additional tax privilege of 200,000 baht of annual income, separate from the tax-deductible amount applied to retirement-related funds, for SSF units in which 65% of net assets are invested in SET-listed securities.

Investors must purchase these investment units between April 1 and June 30 and hold them for at least 10 years.

The main objective of the one-time investment incentive is to shore up equity investment inflows in Thailand’s stock market.

The SSF, approved by the cabinet in December 2019, is a new tax-saving fund meant to replace long-term equity funds (LTFs), whose tax incentive lapsed at the end of last year.

SSF investment conditions are more relaxed than those for LTFs, as SSF units can invest in any assets, while LTFs stipulate equities as the major investment asset.

Chayanee Juengmanon, senior research analyst at Morningstar

‘‘ SSF conditions are unattractive to some, as the lock-up period is at least 10 years, three years longer than for LTFs.

CHAYANEE JUENGMANON Senior research analyst, Morningstar Thailand

Thailand, said there are several reasons why investors shunned the extra SSF units in April.

Because there are still two more months of eligibility, investors are expected to wait until June to pounce — a trend seen with LTF investment, as inflows used to spike every December, the last month of eligibility, Ms Chayanee said.

Investors are still wary of the coronavirus pandemic and a possible second wave breaking out in Thailand amid easing lockdown measures, she said.

SSF investment conditions are also unattractive for some investors, as the lock-up period is at least 10 years, three years longer than for LTFs, Ms Chayanee said.

“For seniors, they prefer to invest in retirement mutual funds, where investment conditions are more relaxed,” she said. “However, wait until the end of June and there could be a huge influx of investment in the extra units.”

Vasin Vanichvoranun, chairman of the AIMC, said SSF investment conditions are designed for long-term investment and the targeted investment groups are different from those for LTFs because of the longer time frame.