Thai ESG Funds Thrive in 2024: A Look at the Boom
Thai ESG mutual funds have experienced a significant surge in popularity among investors in 2024, with net assets under management (AUM) for the category skyrocketing by nearly 400% to 32 billion baht, up from 6.5 billion in 2023, as reported by Morningstar Research (Thailand). This remarkable growth can be attributed to the adjustment of investment conditions, making these funds more appealing to investors. The changes include reducing the holding period from 8 years to 5 years and increasing the tax deduction amount from 100,000 baht to 300,000 baht, according to the Thai unit of the US financial research firm.
Net Purchases Surge in Fourth Quarter
In the fourth quarter of 2024, there was a notable surge in net purchases of Thai ESG funds, with a staggering net fund inflow of 25 billion baht. Among all Thai ESG funds, bond funds emerged as the most popular choice among investors, boasting a net AUM of 16.5 billion baht, which accounts for 51% of the total value. On the other hand, equity funds totaled 11 billion baht, representing 35% of the total value, albeit with the lowest growth rate compared to other fund types.
Investment Returns and Market Leaders
In terms of investment returns, bond funds within the Thai ESG category delivered an average return of 4.59%, while equity funds yielded an average return of 0.85%. Kasikorn Asset Management (K-Asset) emerged as the market leader in 2024, boasting a net asset value of 8.2 billion baht, equivalent to 26% of the Thai ESG total market value.
Expert Insights and Tips for Investors
Morningstar highlighted the popularity of Thai ESG bond funds due to their distinctive performance compared to other fund types. Despite the average return of -3.4% for Thai ESG funds in 2024, all bond funds, including those outside the ESG category, generated a positive return of 6.4%. Conversely, equity funds experienced the sharpest decline with an average return of -4.2%. The top-performing Thai ESG fund in terms of return was the KKP Government Bond Thailand ESG Fund (KKP GB THAI ESG) from KGI Asset Management, delivering a return of 6.4%.
The rapid growth of Thai ESG funds underscores investors’ growing interest in sustainable assets and tax-saving opportunities. Morningstar advises investors to thoroughly research information and investment conditions to ensure that Thai ESG funds align with their financial goals and risk tolerance levels.
So, do you find the idea of investing in Thai ESG funds appealing? It seems like a promising opportunity to support sustainable initiatives while potentially reducing your tax burden. What do you think about the significant growth of these funds and the impact they could have in the investment landscape? Would you consider exploring Thai ESG funds for your investment portfolio? Let’s dive deeper into this exciting trend and discover the potential benefits it offers to investors.