Awards Winner – Equity Large-Cap

Let’s learn about the fund a little bit through our short interview with the winner.

How was the portfolio positioned to navigate the market volatility in 2022?

Krung Thai Dividend Selected Fund (KTSF) employs an active portfolio management strategy, with a well-balanced pool of stocks that are suitable for long term investment. The portfolio is divided into two portions: 1) Core Holdings, which are focused on investing in stable stocks with strong fundamentals and reasonable valuation for long-term capital gains and dividend returns; and 2) Satellite Holdings, which stocks are invested based on the prevailing investment themes to warrant short to medium-term returns. This mixed strategy aims to achieve a higher return than the benchmark index while maintaining lower portfolio volatility in most market conditions.

Amidst the high market volatility, stock selection is critical for consistent returns. The fund manager utilizes quantitative and qualitative data from reliable sources to determine security values. The fund seeks companies that are undervalued, relative to their respective intrinsic values, to enhance the fund's upside potential. In-depth research is also used to avoid stocks that may miss the market expectations. Continuous monitoring and review by the fund manager leads to ongoing adjustments to the portfolio, in response to the changing market conditions. This approach helps reduce investment risks and provide more consistent returns, contributing to the outstanding performance in the past year.

What are the strengths of your investment team that make the fund successful?

Within Krungthai Asset Management (KTAM), the investment team work closely with the inhouse research team and the investment committee thru exchanging information and insights. The investment team members share ideas regularly and leverage on each other’s unique strength in stock picking and weight assignment under different market situations as the stock market changes rapidly. At the same time, the investment team is formed of personnel with wealth of stock market experiences, allowing a healthy diversity of ideas. The team investigates each investment target in detail and monitors them regularly. They are disciplined in investing, sticking to their respective investment plans, though are also flexible to adjust when the market conditions change. At the same time, analysts of the inhouse research team support the investment team with insightful information and analyses, providing company earnings estimates and stock recommendations based on the fair value derived from companies’ fundamentals and their growth potential. The investment committee helps manage the risks by monitoring, controlling and providing guidance on investment strategy and asset allocation.

Comparing with 2022, what is your view on Thailand’s economic outlook and Thai equities; especially large-cap equity?

KTAM projects that the Thai economy in 2023 will continue to recover and outperform 2022. The main driving factors are the recovery of the tourism sector and domestic consumption, which will benefit from the improving service sector. These developments should help drive economic expansion. Meanwhile, the main risk factor is the slowdown of the manufacturing and export sectors caused by concerns about economic weakness in the overseas markets and the restrictive monetary policies around the world. The inflation rate in general is expected to have peaked and should enter a phase of gradual decline. The policy rates would be adjusted gradually to ensure steady economic expansion.

As for the Thai equity market this year, we should see a high level of volatility due to a host of risk factors. External risk factors include a decrease in market liquidity as a result of scaling down of money injection measures and the continuous interest hikes by central banks around the world, including Thailand. Despite the slowing rate of increase, the inflation rate stays at high levels. The global economic slowdown and tensions from geopolitical conflicts and trade disputes are other concerns.

However, positive factors driving the recovery of the domestic economy are the rebound of the service and tourism sectors. Foreign tourists, especially Chinese tourists, will travel abroad and spend considerably after holding back for almost 3 years. This should help improve the Thai economy, particularly the tourism sector, throughout the year. Businesses that rely on the domestic market should experience solid growth thanks to domestic consumption, especially during the upcoming general election. At the same time, foreign funds should increase their investments in emerging markets this year as the Fed is expected to slow its rate hike in the second half of the year and the developed economies should grow at a much slower rate than those of emerging economies. Investing in Asia should therefore yield benefits upon the re-opening of China and the earning recovery of Thai listed companies in the recovering service sector and a decline in overall production costs after commodity prices have peaked.

It is expected that investing in Thai stocks should yield a better return than last year. Also, investing in large cap stocks with a quality of consistent earnings results and strong financial standing should provide investment returns in line with the improving overall market.

What is your opinion regarding ESG investment in Thailand. How does it tie to your portfolio investment decisions?

ESG investing is gaining importance in the Thai investment community, especially among institutional investors. In the beginning, ESG factors used to play a role in identifying risk factors which could pose negative impacts to the invested companies or investment targets. The analysis would help alleviate or mitigate investment risks of the portfolio. Nowadays, ESG investing roses to a new level where ESG-dedicated funds are set up for investing in companies which demonstrate outstanding ESG and corporate governance standards and practices. The main purpose of establishing such funds is to encourage listed companies to pay more attention to this regard and make positive impacts to their communities and the society as a whole. Besides, members of the Association of Investment Management Companies (AIMC) also join force to monitor listed companies of concerning ESG practices and demand their immediate corrective actions. This collective effort helps advance the ESG standards of Thai listed companies. KTAM also incorporates ESG analysis as a key factor into our investment process and set ESG standards for companies to be qualified into our investment universe.

How would you recommend to investors who interested in investing Equity large-cap fund?

KTAM believes investing in large-cap stocks with strong financial positions can provide consistent and stable returns. These companies can withstand challenges caused by economic cycles. Investors should therefore expect less volatile returns and relatively stable dividends from large-cap equity funds, compared with the stock market as a whole, over the long term.