11/26/2018

​Maximize return with no risk via “Guarantee Fund”

Global markets have witnessed volatility during the past couple of months. Several assets which had offered positive returns throughout 9M18 took a turn for the red. Of note was the Dow Jones Industrial Average, which saw negative returns, while the NASDAQ swung wildly and ended up providing only a meager profit. The persistent US-China trade dispute, four interest rate hikes by the Federal Reserve – more than market expectations of three – and volatile global oil prices have all been blamed for this year's global market fluctuations.

Many questions have been raised regarding what should be done if these circumstances linger. How should investors adjust? What types of investment are appropriate for the present situation, especially for investors who are worried about losing their money?

Simply put, risk-averse investors should invest in funds with low or virtually no risk, such as money market funds. Investors may already be familiar with such funds, which mainly focus on short-term debt instruments with maturity of not more than 90 days. Some money market funds may specifically invest in government bonds for the sake of enhanced security.

The capital protected fund is another type of fund which may become more commonplace. As the name suggests, the fund is designed to prote​ct unitholders' initial investment by investing mostly in low-risk assets like government bonds. However, it does not guarantee that investors will not experience losses.

 “Still, low risk-low return is the name of the game. It might be better if a fund can provide a guarantee on initial investment while also offering attractive returns."

To ease investors' anxiety and respond to their need for appealing returns, KAsset has designed an investment innovation, K Guaranteed 5 Years A Fund (KGT5YA), a newly-launched fund which focuses mainly on generating thriving returns through multi-asset solutions – namely bonds, debt instruments and equities – via investment in index funds and exchange-traded funds (ETFs). Most importantly, investors are guaranteed of a protected investment (principal amount less fee) upon the maturity of the investment project. It is now the only guarantee fund* in Thailand.

What is a guarantee fund?

A guarantee fund is a mutual fund wherein invested money or invested money plus return based on a pre-defined amount (in part or in whole) is guaranteed by a financial institution; this feature provides an advantage compared to a capital protected fund. The amount will be available at the fund's maturity or throughout the guarantee period.

 

KGT5YA provides a guarantee on investment (principal amount less fee) undertaken by Credit Agricole – the  second-largest European bank and the world's tenth-ranked bank – with credit ratings of A+ from S&P Global Ratings and Fitch Ratings.

Adopting a proactive investment strategy to maximize the potential for satisfactory returns, the Fund is managed by a team of fund managers from world-class Amundi Asset Management (Europe's largest asset management company, which is also one of the world's top-10 players in the mutual fund business), serving as the outsourced fund manager, which will adjust portfolios by choosing the assets that are best suited to the changing circumstances.

Given its ample liquidity, the Fund allows investors to redeem investment units every business day, based on the NAV of the redemption date (investors who conduct early redemption of funds are not entitled to the guarantee).

KGT5YA is therefore an interesting alternative vehicle for risk-averse investors (shielded from principal loss) who also seek growing returns. Prospectus and conditions on guarantee can be obtained at all KBank branches, KAsset and other selling agents. Minimum initial investment is only 500 Baht. The Fund is open for subscription from November 26 to 30, 2018. For more information, please call the KAsset Contact Center at 02-673-3888.

Investors should have a thorough understanding of the nature of the products, and conditions for returns and risks, before deciding to invest.

As of November 23, 2018, by Mr. Kittikun Tanaratpattanakit, Product Strategy Department, KASIKORN ASSET MANAGEMENT Co., Ltd. (KAsset)


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11/26/2018