Which bank offers the best returns on mutual funds? Mutual fund investment strategies for 2024

“Want to start saving but feel overwhelmed” This question isn’t as daunting as it seems because no matter how much investment experience you have or how much capital you possess, everyone can use mutual funds as a tool to build wealth. Today, we will explore deeply, including preparing a list of 10 mutual funds that are worth considering this year, so you can embark on a journey to create a secure future wisely.

Understanding Mutual Funds from the Basics

If you need a simple explanation, Mutual Fund (Mutual Fund) is a collective investment scheme where many individual investors pool their money into a large fund. This fund is managed by a professional called “Fund Manager” (Fund Manager), under a fund management company (Asset Management Company), who invests the pooled money in various assets according to a predetermined plan.

When we contribute money into this investment community, our funds are converted into “Units” (Units), and the value of each unit is called “Net Asset Value” (NAV) (Net Asset Value). The NAV is calculated and disclosed daily on business days, reflecting the overall performance of the assets held by the fund. When asset values increase, NAV rises accordingly, representing the profit for unit holders.

Who is mutual fund suitable for?

Mutual funds are not limited to any particular group but are suitable for many types:

• Beginners in investing: If you lack expertise in analyzing stocks or bonds, mutual funds are like hiring a professional advisor to take care of your investments.

• Busy professionals: For those working full-time with little time to follow financial news and market changes, fund managers handle that for you.

• Risk diversification seekers: The key principle is “don’t put all eggs in one basket.” Mutual funds allow you to invest in multiple asset classes, even with a small amount of capital.

• Tax benefit seekers: Some funds, such as SSF, RMF, or ThaiESG, are designed to offer tax deductions under certain conditions.

With large capital, fund managers have bargaining power and access to investment opportunities that small investors cannot easily reach, such as IPO allocations or private bonds with limited offerings.

Various Types of Mutual Funds

The scope of mutual funds is broad. To help investors choose according to their goals and risk tolerance, they can be categorized in several ways:

Categorized by Asset Type

1. Money Market Funds: Lowest risk, suitable for short-term savings, investing in deposits and high-quality short-term debt instruments.

2. Bond Funds: Low to medium risk, suitable for those seeking higher returns than savings but not willing to take high stock market risks, mainly investing in bonds and debentures.

3. Equity Funds (Stocks): High risk but with the highest potential for profit in the long term, suitable for those who can tolerate volatility and plan to invest long-term.

4. Mixed Funds: Flexible, fund managers adjust stock and bond proportions based on market conditions, ideal for those wanting diversification but unsure of the right allocation.

5. Alternative Asset Funds: Invest in gold, oil, real estate; high risk and more complex.

Categorized by Special Strategies

1. Index Funds and ETFs: Track performance of a benchmark index like SET50 or S&P500, with lower fees.

2. Industry Sector Funds: Focus on specific industries such as technology, healthcare, energy; high risk but potentially high returns.

3. International Funds: Open the door for Thai investors to diversify into global stock markets like the US, China, Vietnam.

4. Tax-Exempt Funds: Various policies similar to regular funds but with additional conditions for tax benefits, e.g., SSF, RMF, ThaiESG.

Tips for Choosing the Right Mutual Fund

Amid thousands of funds in the market, finding the “right” one may seem daunting. However, with a systematic selection process, you can definitely find suitable funds.

Step 1: Clarify Your Self-Assessment

Before looking outside, understand yourself through three key questions:

• Investment Goals: Why are you investing? Retirement? Buying a car? Education fund? Different goals lead to different fund types.

• Time Horizon: How long can you let your money grow? The longer, the more you can consider higher-risk assets.

• Risk Tolerance: Can you sleep peacefully if your portfolio drops 10-20%?

Step 2: Study Investment Policy

Read the Fund Fact Sheet thoroughly to understand where the fund invests, in which countries, and what strategies it employs.

Step 3: Analyze In-Depth Data

• Past Performance: Remember, past results do not guarantee future performance. Compare with benchmark indices and similar funds.

• Maximum Drawdown: Indicates the worst loss experienced; are you comfortable with that?

• Sharpe Ratio: The higher, the better; shows how much return you get per unit of risk.

• Total Expense Ratio (TER) (TER): Funds with similar policies but lower fees tend to deliver higher net returns.

10 Mutual Funds to Watch in 2024

Before listing, understand the big picture of the economy in 2024:

• “Year of Two Halves”: The first half may be volatile, but the second half is expected to recover as businesses adapt.

• Connecting Megatrends: The AI revolution accelerates investments in clean energy, infrastructure, and chip sensor hardware.

Based on this overview, we selected 10 mutual funds covering diverse assets aligned with global trends:

Thai Dividend Equity Funds (Thai Dividend Equity)

1. SCB Thai Equity Dividend Fund (SCBDV)

• Asset Management: SCBAM
• Strategy: Invest in large-cap Thai stocks with strong fundamentals and good dividend history.
• Risk Level: 6 (High risk)
• Suitable for: Those seeking income during investment, comfortable with Thai stock market volatility.

2. Krungsri Dividend Equity Fund (KFSDIV)

• Asset Management: KSAM
• Strategy: Invest in dividend-paying stocks across large to small caps, aiming for growth.
• Risk Level: 6 (High risk)
• Suitable for: Investors seeking a balance between income and growth.

Equity Funds Abroad (Overseas Equity)

3. KTAM World Technology Artificial Intelligence Equity (KT-WTAI-A)

• Asset Management: KTAM
• Strategy: Invest via the main fund Allianz Global Artificial Intelligence, focusing on companies benefiting from AI.
• Risk Level: 6 (High risk)
• Suitable for: Long-term investors confident in AI’s potential and willing to accept high risk.

4. Bualuang Global Innovation & Technology Fund (B-INNOTECH)

• Asset Management: BBLAM
• Strategy: Invest through Fidelity Funds - Global Technology, covering cloud, e-commerce, fintech.
• Risk Level: 7 (Very high risk)
• Suitable for: Growth-oriented investors aiming to ride the tech wave.

5. Principal Vietnam Equity A (PRINCIPAL VNEQ-A)

• Asset Management: Principal
• Strategy: Select high-growth Vietnamese stocks in banking, retail, tech.
• Risk Level: 6 (High risk)
• Suitable for: Those seeking rapid growth in emerging markets.

###Bond Funds (Bond Funds)

6. KT Short-Term Bond Plus Fund (KTSTPLUS-A)

• Asset Management: KTAM
• Strategy: Invest in high-quality short-term debt instruments, less than 1 year.
• Risk Level: 4 (Moderate to low)
• Suitable for: Conservative investors needing short-term liquidity and portfolio protection.

###Hybrid Funds (Hybrid Funds)

7. TISCO Flexible Plus Fund (TISCOFLEXP)

• Asset Management: TISCO Asset Management
• Strategy: Flexibly adjust stock and bond proportions from 0-100% based on market conditions.
• Risk Level: 6 (High risk)
• Suitable for: Investors trusting fund managers and seeking adaptable tools.

###Thematic Funds (Thematic Funds)

8. Krungsri ESG Climate Tech Fund (KFCLIMA-A)

• Asset Management: KSAM
• Strategy: Invest via DWS Invest ESG Climate Tech focusing on climate solutions, clean energy, electric vehicles.
• Risk Level: 6 (High risk)
• Suitable for: Long-term investors aligned with sustainability megatrends.

9. K-Global Healthcare Fund (K-GHEALTH)

• Asset Management: KAsset
• Strategy: Invest through JPMorgan Funds - Global Healthcare, in leading healthcare companies worldwide.
• Risk Level: 7 (Very high risk)
• Suitable for: Those seeking stable growth in healthcare sectors across economies.

10. Asset Plus Sustainable Thai Stocks (ASP-THAIESG)

• Asset Management: Asset Plus
• Strategy: Select Thai stocks with strong ESG scores based on SET ESG Rating.
• Risk Level: 6 (High risk)
• Suitable for: Investors in quality Thai stocks, sustainability-conscious, seeking tax deductions.

Pros and Cons of Mutual Funds You Should Know

Advantages

• Diversification: Small investments can own a variety of assets, reducing concentration risk.

• Professional Management: Many analysts and fund managers monitor and make decisions on your behalf.

• Liquidity: Open-end funds can be bought and sold daily, easily converting to cash.

• Low Entry Barrier: Many funds start with hundreds or thousands of baht, accessible to everyone.

• Variety of Policies: Wide range from conservative to aggressive, fitting all goals.

Disadvantages

• Fees: Professionals need to be paid, which can impact returns.

• Lack of Control: You cannot pick individual stocks; decisions are made by the fund manager.

• Manager Risk: Poor decisions by the manager can lead to underperformance.

• Taxation: Capital gains are tax-free, but dividends are usually taxed at 10%.

What Type of Fees Do Mutual Funds Have?

Hidden costs significantly affect long-term returns, so study carefully:

Direct Investor Fees

• Sales Charges: Deducted at purchase, e.g., 1.5% on 10,000 Baht investment, actual funds received are 9,850 Baht.

• Redemption Fees: Deducted at sale (less common now).

• Switching Fees: Deducted when transferring between funds within the same management company.

Fund Management Fees

Embedded in NAV, deducted daily, comprising Total Expense Ratio (TER) (TER):

• Management Fee
• Custodian Fee
• Registrar Fee

A difference of about 1% per year can compound into a significant gap over 20-30 years. Therefore, choosing funds with reasonable fees is key to successful long-term investing.

Conclusion

Mutual funds have proven to be effective investment tools, accessible and suitable for investors at all levels. In 2024, a challenging yet opportunity-rich year, portfolio diversification using funds aligned with global megatrends will be crucial for long-term wealth creation.

Start by studying thoroughly, selecting funds that match your goals and risk capacity. Holding your investments patiently over time will demonstrate the power of compounding, helping you build wealth from youth to retirement with confidence.