Funds to push CG compliance

Fourteen asset management firms will separately launch mutual funds to invest in companies that comply with good corporate governance (CG) and are on the CG list this year, with the aim of encouraging the best practices.

They include Krung Thai Asset Management, Krungsri Asset Management, Kasikorn Asset Management, CIMB Principal Asset Management Thailand, TMB Asset Management, SCB Asset Management, BBL Asset Management, Bangkok Capital Co Ltd, UOB Asset Management, One Asset Management, MFC Asset Management Plc, Talis Asset Management and Asset Plus Fund Management.

Voravan Tarapoom, chairwoman of the Federation of Thai Capital Market Organizations, said these asset management firms, in cooperation with the Institute of Directors and other organisations, will set the criteria for stocks that will be qualified to be on the CG list.

To qualify, companies’ management must have never breached the law and acted in an environmentally and socially responsible manner, she said, noting that any company on the list will be removed if they are found to not qualify.

Initially, stocks on the CG list will be selected from those that have won the SET Sustainability Awards 2016, said Mrs Voravan, adding that the 50 firms are listed on the SET and the remainder are on the MAI.

“We need to check on other details, including financial performance. Our 14 asset management companies will consider them and we will disclose additional information later,” she said.

The mutual fund’s set up to invest in companies with CG have been supported by Fetco, the Stock Exchange of Thailand (SET), securities regulators and other market participants.

Mrs Voravan said that assets under management of the 14 asset management companies accounts for 90% of the industry’s AUM.

The participating asset management companies will contribute 40% of the management fee to be derived from the soon-to-be-set up funds to support organisations or projects related to CG and anticorruption efforts, she said.

“These equity funds’ initial public offerings will be rolled out this year. It will be very exciting and interesting to see the performance of each fund if they are investing in stocks in the same universe. We’re confident that the long-term returns will be good. In addition to returns in monetary terms, investors and society will get returns in other forms that are also important,” said Mrs Voravan.

Anand Panyarachun, an ex-prime minister, said the concept of setting up the fund is good, but the process to pick stocks for the list should be transparent and people should study the details before making investments.

Meanwhile, SET president Kesara Manchusree said CG in the Thai capital market has developed very well, reflected by the 14 Thai-listed firms on the DJSI Index — the highest number in Asean.

Investors and corporations are increasingly concerned about the CG, she said.