Krung Thai Asset Management aims to boost its asset portfolio by 15% this year to 220 billion baht, according to CEO Somchai Boonnamsiri. KTAM, a unit of Krung Thai Bank, had 192 billion baht in assets under management at the end of 2008. The company plans to launch a variety of new funds this year, including money market funds, private funds, property and infrastructure funds.

One property fund will be set up to invest in the three-star Mercure Pattaya Hotel. The asset size is projected at 500 million baht for the leasehold fund, with a guaranteed return of 7% per year for the first three years. The fund also has first priority to purchase assets once the contract expires in 30 years at less than 50 million baht.

Mr Somchai acknowledged that liquidity was a concern for local property funds, as investors are now focused more on capital gains rather than fixed-return investments.Freehold funds are also easier to understand than leasehold funds for most investors, he said, adding that leasehold assets typically offer higher dividends.

Mr Somchai said KTAM's new property fund was now under review by the Securities and Exchange Commission, which has raised concern about revenue projections in light of the economic downturn and the decline in tourism.

He said the outlook for the asset management industry is challenging this year, as stocks remain volatile while interest rates fall, pushing down yields.

In the provident fund segment, KTAM expects to remain among the leaders this year with assets of 60 billion baht, compared with top-ranked Kasikorn Asset at 63 billion.

Veera Vutthikongsirigool, KTAM chief investment officer, said the company's bond investments would be restricted to securities with credit ratings of A or higher. Target returns for three- to five-year instruments are around 2% to 3% per year for low-risk funds focused on government bonds.

source : www.bangkokpost.com