Infrastructure, property funds tabbed as hot picks

Infrastructure and property funds are among the most promising asset classes this year, while returns on the stock market will be positive but highly volatile, says a broker.

Chavinda Hanratanakool, chief executive at Krungthai Asset Management (KTAM), said the asset classes likely to generate the best returns are infrastructure and property funds.

She expects funds to flow into equities and high-performing mutual funds because of the low interest rate environment stimulating depositors and bond investors.

On average, infrastructure funds generate returns of around 7%, while leasehold property fund average 7% and freehold property funds 6-7%. Infrastructure funds and property funds remain popular mostly for institutional investors as long-term investments.

The Electricity Generating Authority of Thailand’s hotly anticipated infrastructure fund worth 20 billion baht is likely to be launched this May. It will be the first infrastructure fund for a state enterprise.

She said the Thai bourse would remain one of the highest-yielding assets this year, supported by low interest rates and high liquidity from economic stimulus packages introduced by the European Central Bank and Japan.

“However the stock market will be even more volatile this year than last owing to speculation on the normalising of interest rates by the US Federal Reserve in the second half this year,” Ms Chavinda said.

She said KTAM would continue launching equity trigger funds for both the local and global markets. But returns are likely to be narrow this year due to market fluctuation. It also plans to launch several real estate investment trusts (REITs) this year, with total assets estimated at 7 billion baht.

CIMB-Principal Asset Management also sees investors diversifying into the global market to tap better returns.

Its chief executive Jumpol Saimala said equity funds were likely to be an attractive investment this year due to the low interest rate environment. But markets such as China, India and North Asia will have more upside than the Thai bourse because of higher economic growth.

The firm is offering a new balanced fund investing in global fixed income assets and stocks with expected annual returns of 8-10%.