TMBAM Eastspring makes good on more than B68bn
TMBAM Eastspring has made more than 68 billion baht in repayments to mutual fund unit holders, equivalent to 34-55% of assets in each fund since the fund closures in March.
The company has also asked the market regulator for an extension of the repayment period for three more months to Oct 7.
Boonchai Kiattanavich, interim managing director of TMBAM Eastspring and managing director of Thanachart Fund Eastspring, said TMBAM Eastspring closed four fixed-income funds amid bond market turmoil caused by the coronavirus pandemic, which resulted in unprecedented outflows from continuous redemptions.
The net asset value (NAV) of mutual funds managed by local asset management firms saw a decline of 824.6 billion baht in the first quarter, with TMBAM Eastspring registering the biggest loss of 272.3 billion baht, according to the Association of Investment Management Companies.
Four fixed-income funds managed by TMBAM Eastspring have ceased all transactions and operations amid heavy redemption that nearly sparked a liquidity crunch for Thailand’s mutual fund industry.
Of the four fixed-income funds, the two funds in the spotlight are TMB Ultra-Short Bond Fund (TMBUSB) and TMB Aggregate Bond Fund (TMBABF). The two others are TMB Thanaplus Fund (TMBTHANAPLUS) and TMB Bond Fund (TMBBF).
“There was no default in underlying assets of these funds, all of which were of investment in investment-grade bonds,” Mr Boonchai said. “These actions [fund closures] were necessary to allow the orderly sale of assets and to preserve value for investors.”
The value received from the assets sold in all four funds is higher by approximately 0.90% on average compared with the carried value of assets on the last trading day, he said.
As of June 26, the estimated NAV of the remaining assets combined with the repaid amount of three funds, TMBTHANAPLUS, TMBBF and TMBABF, remained higher than the NAV on the last trading day.
Meanwhile, the estimated NAV of the remaining assets combined with the repaid amount of TMBUSB is lower by about 0.5% compared to the NAV on the last trading day.
“Overall, bond prices have improved from the last trading day of these funds, allowing fund managers to gradually liquidate part of portfolios at a fair and reasonable price,” Mr Boonchai said.
But the market situation has not fully recovered to the pre-pandemic level, thus accelerating the liquidation process of the remaining 80 billion baht in the four funds.
Without consideration for timing during market liquidity, it could result in significantly lower-than-expected proceeds for unit holders, Mr Boonchai said.
TMBAM Eastspring therefore requested and received a repayment extension in the liquidation period for another 90 days, from July 9 to Oct 7.
Data recorded that the four funds’ assets plunged from 460.7 billion baht at year-end 2019 to 195.33 billion baht after a huge redemption in March.
Mr Boonchai said TMBAM Eastspring and Thanachart Eastspring will launch a new fund in the second half, but the move will hinge on market timing and conditions.