Capital flows to Asia seen continuing
Equity funds are expected to continue to attract inflows in the second half of the year as capital flows shift to Asia due to weakness in the US and European markets, according to Morningstar Research (Thailand).
Managing director Peet Yongvanich said equities should outperform other asset classes as the weak global economic environment continues to keep interest rates low.
In the second quarter, Thai equity funds posted a 0.7% return compared with -1.3% for Thai equity large-cap funds, -5.2% for global equity funds and -8.6% for emerging-market equity funds.
Asia-Pacific excluding Japan funds fell by 4.5% in the second quarter, while gold was off 4.1% and energy commodities slid by 16.2%.
Most fixed-income funds, meanwhile, posted returns of less than 1%, as fund managers shifted assets to short-term instruments.
On a one-year perspective, Thai small- and medium-cap equity funds posted the biggest return _ 23.2% for the year to June _ followed by large-cap equity funds at 15% and aggressive allocation funds at 11.6%.
The Stock Exchange of Thailand index posted a 14.3% return over the period.
Losing fund classes included emerging-market equities (-17.7%), Asia-Pacific excluding Japan equities (-14.2%) and energy commodities (-12.7%).
Kittikun Tanaratpattanakit, a senior analyst at Morningstar, said the top holdings in high-performing equity funds included Bangkok Bank, CP All, Berli Jucker, Airports of Thailand and Bank of Ayudhya.
He said market volatility in the second half is expected to remain high on global economic uncertainty, though equity funds should continue to outperform other classes.
Sathapana Leoprapai, chief executive of the Association of Investment Management Companies, said fund managers are likely to stay underweight in energy stocks as fuel prices trend downward.
But financial and food stocks, as well as gold, remain interesting asset classes.
By Nuntawun Polkuamdee
26 July 2012