SEC revises major rules on investment of mutual funds in line with international guidelines and market development

Bangkok, January 26, 2016 – The SEC has revised several regulations concerning investment policies of mutual funds and provident funds (PVD) to enhance flexibility and compliance with international guidelines and market development.

SEC Secretary-General Rapee Sucharitakul said: “The amendments which have been approved recently by the Capital Market Supervisory Board aim to increase competitiveness of the ever-growing asset management business by, for example, relaxing several requirements. In so doing, appropriate investor protection is maintained, and more investment choices promoted.”    

Such amendments include, the following matters:
    (1) Determination of types and characteristics of investible assets based on principles instead of specific details;
    (2) Permission for mutual funds to invest in more varieties of assets according to suitable risk profile. For example, funds offered to retail investors are now allowed, on the condition that pre-specified ratios apply, to invest in non-listed infrastructure funds that may not have already accepted retail investors. Previously, mutual funds were allowed to invest in SET-listed infrastructure funds or those offerred to retail investors only;
    (3) Relaxation of PVD rules by increasing the permissible investment  proportion for PVDs in property funds and infrastructure funds, combined with alternative assets such as commodity, from 15 percent to not more than 30 percent of the NAV. In addition, to offer more choice to PVD members, establishment of PVDs as sector fund whose investment policy concentrates on securities of certain industry sectors is allowed provided that there is an investment limit for each member;
    (4) Promotion of investment diversification to be in line with international standards and market development. This includes determination of investment ratios for certain products (product limit) suitable for market environment and relevant investment policies, and cancellation of product limit for general mutual funds;
    (5) Derivative investment in accordance with international standards. This includes (i) calculation of ratio limit, (ii) categorization of fund types to better reflect investment risks based on net exposure instead of investment value, and (iii) revision to investment ratio in various types of assets to be more suitable and in line with different types of funds. 

“These amendments aim for practical implementation in the growing mutual fund industry, with an average growth rate during 2009-2015 as high as 17 percent per year and the current total net asset value as high as 3.6 trillion baht. Increasingly, asset management companies are interested in investing in various types of assets, both local and international. The above amendments have taken such fact into consideration along with comments and recommendations from business sectors and stakeholders. We expect that these amendments will help to increase competitiveness of asset management companies, reduce their business constraints, and at the same time promote more diverse choices for investors,” said Mr. Rapee.