A Window into Thai Mutual Fund Managers’ Perception and Decision-Making Process

Abstract

This paper identifies key features of the Thai mutual fund industry and analyzes determinants of those characteristics using unique survey data from 45% of fund managers registered in Thailand in 2012. The Thai mutual fund industry has some unique characteristics. It has experienced rapid growth and is dominated by bank-related funds that are mostly fixed income funds. Equity allocation of the fund industry and our sample funds are below optimal allocation benchmarks. However, country-level allocation is close to optimal, suggesting that Thai investors who invest in equity prefer to do so directly rather than through equity mutual funds. Fund managers perceive that too much regulation, investors’ preference for deposits and insufficient liquidity limit growth in their equity investments. Managers in our survey indicate that investors do not consider expense ratio and management fee important in determining mutual fund investments. This is contrary to general investment recommendations. Thai bank-related fund managers believe that investors place more importance to brand reputation than performance, whereas foreign fund managers view performance as more important. Thai bank fund managers are more concerned about local interest rates than Thai non-bank and foreign fund managers.