A Mutual Fund is money pooled from multiple investors into a large single fund registered with the Securities and Exchange Commission and the stock exchange.  An asset management manages the fund according to the designated investment policy. Funds are effective investment vehicles, systematically and professionally managed.
 
A Mutual Fund is a legal entity separated from its management firm. The management firm is responsible for setting up the mutual fund, the investment policy and subsequently managing the fund. In the event of the management firm’s bankruptcy, the mutual fund will not be affected. Moreover, the mutual fund is supervised by a trustee who is a third party unaffiliated with the management firm; the trustee scrutinizes the management firm on behalf of the investors.

1. Expand investment opportunities without requiring much capital
Access and widen your investment opportunities to enhance returns just like large or institutional investors even with sums as small as 10,000 Baht.
 
2. Overcome problems regarding time or knowledge
For convenience, save time by appointing an asset management company with investment expertise and experience to handle investments for you. An asset management company is up to date with investment matters, hence has access to information and able to swiftly interpret the impact of various news and events. And this results in timely decisions.
 
3. Diversify risks without large capital
Risks are diversified across many types of securities, something not possible to accomplish by oneself without large invested capital and extensive analysis to achieve proper allocation.
 
4. Ability to choose from many levels of risk and return
Different types of investments contain different levels of risk. For example, equity investments are riskier than fixed income instruments, but at the same time, offer higher potential returns. Before you make an investment decision, you need to review more than just the fund’s potential returns. Fund features and investment policies should be studied as they indicate the amount of risk which you will encounter during the duration of your holdings. Determine the right balance between potential returns and risks that seems best for you.
 
5. Strictly regulated by the government
There are mechanisms to mitigate investment risks and fraud through supervision by various agencies to ensure fairness for investors. 

• Securities and Exchange Commission (SEC) 
  Supervises the mutual fund industry to establish fairness by overseeing all related parties including of asset management firms, trustees, Association of Investment Management Companies and the unitholders.

• Trustees 
  Responsible for scrutinizing the fund management firm’s activities on behalf of the investors to ensure compliance with the fund’s requirements. The trustee also serves as the fund custodian to safeguard the fund’s assets. More importantly, the trustee cannot be affiliated with the management firm.

• Association of Investment Management Companies 
  The fund management firm must be a member of the association. The association establishes the code of ethics and professional standards which fund executives, managers and relevant employees must comply. It also serves as another central source of fund management information for anyone’s reference.

 
6. Tax Benefits
Mutual funds are not considered to be taxable, meaning that their revenues from all types of investments are tax exempted. This also applies to dividends or capital gains received by unitholders.
 

1. Categorized by redemption method
 
Mutual funds, based on method of redemption, can be categorized into 2 types:
 
Open-end funds
Unitholders can buy or redeem fund units as indicated on the prospectus.
 
Close-end funds
Unitholders can only subscribe to the fund units once and cannot redeem until the fund has matured. 
 
Differences between open-end and close-end funds
 

Type	Open-end funds	Close-end funds
Purchase of units	Can buy additional units as indicated in the prospectus	Can only buy units once during the initial subscription period
Withdrawal and redemption of units	The management firm allows redemption of units on designated dates	Cannot redeem until the fund has matured
Amount of units	Subject to changes during the fund’s duration as additional units are purchased or redeemed	Remains unchanged during the fund’s duration
Fund duration	Funds with or without fixed maturity dates are both available.	Fixed maturity date
Trading in Secondary Market	-	Are typically listed and traded on the secondary market, providing liquidity for unitholders not wishing to hold until the fund’s maturity

2. Categorized by investment policy

Mutual funds categorized by investment policies

Mutual funds registered with the Securities and Exchange Commission and the stock market must have one of the following characteristics:

• Retail Fund
• Non-Retail Fund, a type of mutual funds in which all unitholders are institutional investors.

Types of mutual funds categorized by investment policies are summarized below:

1. General mutual funds

2. Special mutual funds

• Fund of Funds invest a minimum of 65% of its assets in other funds’ unit trusts and warrants in each fiscal year.
• Money Market Funds invest in fixed income instruments with maturity dates or contract durations not exceeding one year from the date of investment.
• Guarantee Funds are mutual funds with a guarantor to ensure unitholders who keep the units until maturity will receive the invested capital or the invested capital plus return upon maturity or redemption, as appropriate, for amounts covered.
• Capital Protected Funds are mutual funds with a designated investment plan formulated by the asset management company to protect the unitholder’s initial invested capital as outlined in details specified in the fund scheme.
• Specific Funds has less investment diversification than what is normally required by the Securities and Exchange Commission and the stock exchange for other funds.
• Index Funds adopt an investment policy aimed to create returns for unitholders based on certain indexes as designated in the project’s details. Such indexes must be endorsed by the SEC office.
• Foreign Investment Funds have a policy to invest in unit trusts sold abroad.
• Mutual Funds for Solving Financial Institution Problems is a mutual fund with an investment policy designed to resolve commercial banks’ capital problems.
• Vayupak Fund is a special mutual fund set up by Cabinet resolution issued on 1 July 2003.
• Retirement Mutual Funds have the main purpose of promoting long-term and regular savings for retirement, to ensure financial security for oneself and family.  An investor is eligible for a 15% deduction of taxable income per year, not exceeding 300,000 baht when combined with the Government Pension Fund. To qualify, an investor must invest at least 5,000 baht or 3% of annual income each year. Various investments are available to select from.
• Foreign Investor Mutual Funds are mutual funds offered to investors who do not have residency in Thailand.
• Long Term Equity Funds have the main purpose of promoting long-term investment in the equity market, to help increase stability of the Thai stock market. An investor is eligible for a 15% tax deduction, not exceeding 300,000 baht. The investors must hold for at least 7 years. Fund policy states that a minimum of 65% of the fund’s assets will be equity securities.

 

 

• Retirement Mutual Fund : RMF

A fund for the main purpose of promoting long-term regular savings for retirement to build financial security for oneself and family. An investor is eligible for a 15% personal tax deduction per year, not exceeding 300,000 baht when combined with the Government Pension Fund. To qualify, an investor must invest a minimum of 5,000 baht or 3% of annual income each year, for at least 5 years, and invest continuously until reaching the age of 55. The required investment may be exempted every other year or for years when the investor has no income.
 

KTAM offers many RMFs to choose from, ranging from those with low to high risk.
 

• Long Term Equity Fund : LTF

A type of mutual fund with the main purpose of promoting long-term investment in equities to help increase the stability of the Thai stock market.  An investor is eligible for a 15% personal tax deduction per year, not exceeding 500,000 baht when combined with the Government Pension Fund.  An investor is not required to invest every year but must hold any units purchased for at least 7 years.
 

KTAM offers many LTFs to choose from, starting from only an investment of just 500 baht.

1. Thoroughly study fund details and important information regarding that particular fund from its prospectus to understand its investment and dividend policies as well as how to trade the units. You can obtain the prospectus from the management firm, sales representatives or brokers.
2. Determine your own investment purpose and goal. For instance, do you prefer to invest short or long term? How are you planning to spend your returns? Is it for your children’s education, your retirement, purchase of a house or car, for travel, to start your own business, or cover future health care expenses? Then compare mutual funds to decide which one is the best fit.
3. Understand the different types of investment risks. You have to determine how much risk you wish to accept because different people are comfortable at different risk levels. If you cannot tolerate any risk, investing through cash deposits may be ideal for you. However if you can take on some risk, you could purchase government bonds directly or invest in mutual funds with a policy to invest in government-issued bonds. If you can accept even higher risk, you may choose mutual funds which invest in debt instruments such as corporate debentures or equity instruments such as stocks. You may gauge your risk acceptance level based on your age. For instance, if you are 30 years old and plan to work till 60 years old, you can still earn income for 30 more years hence can be fairly tolerant towards higher risk compared to someone already aged 60 burdened with expenses and not earning income. Based on your risk tolerance, choose the appropriate fund that either focus on bonds or common stocks.
4. Do not overlook the investment terms and conditions of the fund you are interested in, or the particulars regarding the trading of units. This is important to ensure you have liquidity in case you need to use the money tied up in the fund.
5. Review fees and other related expenses described in the prospectus and sales document so you are informed which expenses are charged directly to you and which ones are collected from the fund.
6. Choose an asset management company that you are satisfied with by considering important factors such as license to manage mutual funds, possession of knowledgeable and highly experienced staff,  sound investment philosophy and good ethics. All of these are reflected though the company’s performance and history which is tracked by the Securities and Exchange Commission.

 Note: Before making an investment, if you have any queries or seek additional investment advice, always contact the asset management company or sales representatives for clarification.

1. You have the right to obtain the list of all asset management firms which have authorized individuals or juristic persons to serve as representatives to trade unit trusts. You can also obtain such information from your asset management company or your sales support representatives.
2. You are entitled to information regarding the asset management firm’s name, address and its sales support representatives. These may include the names, addresses and identification numbers of the firm’s securities brokers. You can obtain such information from your securities brokers and sales support representatives.
3. You are entitled to information about the risks associated with your unit trusts including advices and descriptions about the investment.
4. You have the right to receive information of important events which may directly affect unitholders’ rights and benefits or your investment decisions.  Such events may include sales of unit trusts pending a merger of two funds.
5. You have the right to information about potential conflict of interests such as fees and brokerage commissions that brokers earn from trading your unit trusts.
6. If you have never been a client of any broker nor have any intention of investing, you are entitled to refuse cold calls from investment consultants.
7. If you are not an institutional investor and have never been a client of any unit trust sales representative, you have the right to cancel unit trust trade orders made during cold calls within two days, starting from the date of the trade order, without incurring any fees. In a case where the purchase of unit trusts was made after the initial public offering, you have the right to return the unit trusts for a full refund without any fee.