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SEC amends rules on advertisement and disclosure of trigger funds

Bangkok, September 20, 2016 – The SEC has amended the rules governing the advertisement and disclosure of information on trigger funds to facilitate investors’ thorough understanding of the key features and the risks involved in trigger fund investment.

The notifications* regarding such amendments will come into force on 1 October 2016.
SEC Secretary-General Rapee Sucharitakul said: “The purpose of these amendments is to require advertisement and disclosure of trigger funds to be more inclusive to give investors a clearer picture of this type of fund so that they would have correct and complete information necessary for decision making.”    
The key points of change include the requirement for the fund title and the advertisement warning to clearly state that returns are not guaranteed and pre-maturity redemption is not allowed.  

In addition, in case of advertisement of past performance, the information must be presented in comparison with other trigger funds currently or previously under management of the same asset management company to give investors an overall background for decision making. In other words, the disclosure should not only cover the list of funds that have successfully hit the trigger point by the date, but should also cover the list of funds that have failed to do so, which means funds that never reached the trigger point or able to but after the determined schedule.
The amendments also require that asset management companies disclose the types of fees collected from trigger funds more clearly, especially those different from the ones collected from other mutual funds with similar investment policies, for example, the set-up fund fee, the management fee for the entire duration even when reaching the trigger point ahead of schedule, or the trigger redemption fee. Also, the new rules require the disclosure of investment strategy that differs from other funds with the same investment policy.

During the first half of this year, 12 new trigger funds were launched with the total value of 1,426 million baht, reduced from 71 funds with the total value of 33,268 million baht in the same period of 2015. Currently, more than 200 trigger funds are active but have not reached the trigger point.  
Trigger fund attracts a lot of investors’ interest. This regulatory amendments aim to give investors an access to clearer and fuller disclosure of such funds before making a well-informed investment decision,” said Mr. Rapee.

* - The SEC Office Notification No. Sor Thor. 25/2559 Re: Rules in Detail concerning Advertisement and Sale Promotion of Securities and Derivatives Intermediaries (No. 2);
  - The SEC Office Notification No. Sor Nor. 26/2559 Re: Prospectus for Offering of Investment Units of Retail Mutual Funds, Mutual Funds for Accredited Investors and Mutual Funds for Institutional Investors;
  - The SEC Notification No. Nor Por. 2/2559 Re: Guidelines for Determination of Title of Mutual Fund Which Shall Be Dissolved or Whose Units Shall Be Automatically Redeemed upon Reaching the Specified Value (Trigger Fund).