What is a mutual fund and which type should you choose for yourself?

“Want to build wealth but don’t know where to start?” Many people have this question. But the truth is, regardless of how much investment experience or capital you have, everyone can use what is called a mutual fund as a tool to create wealth. Today, we will explore in depth what a mutual fund is, what types there are, and how to choose the right fund, along with 10 interesting options for the year 2569.

Getting to Know Mutual Funds: Collective Investment

If you want a simple explanation, mutual fund (Mutual Fund) is like many individual investors pooling their money together into a large sum and entrusting it to a professional called a “fund manager”, who works at a fund management company (Asset Management Company (AMC)) to manage and invest that money in various assets.

When you invest your money, it is converted into “unit trusts”. The value of each unit is called “Net Asset Value” or NAV (Net Asset Value). The NAV is calculated and announced every business day to reflect the performance of all assets held by the fund.

As the assets invested by the fund increase in value, the NAV also rises, representing your profit as a unit holder.

Who should invest in mutual funds?

Mutual funds are suitable for almost everyone, especially:

• Beginner investors who lack in-depth analysis knowledge - fund managers act as personal advisors
• People with no time to follow market news - experts handle that for you
• Those seeking diversification - the principle of “don’t put all your eggs in one basket” is practiced in mutual funds
• People looking for tax benefits - some types of funds like SSF, RMF, ThaiESG offer tax advantages

With large capital, fund managers have bargaining power and access to investment opportunities that individual investors cannot reach.

Types of Mutual Funds: Categorized by Assets and Policy

Based on Asset Class(

1. Money Market Funds )Money Market Fund(

• Risk: Lowest
• Invests in: deposits, high-quality short-term debt securities
• Suitable for: short-term cash holding or emergency reserves

2. Fixed Income Funds )Fixed Income Fund(

• Risk: Low to Moderate
• Invests in: government bonds, corporate bonds
• Suitable for: those seeking higher returns than savings but with moderate risk

3. Equity Funds - Stocks )Equity Fund(

• Risk: High
• Invests in: Thai and international stocks
• Suitable for: investors comfortable with volatility and with long-term goals

4. Hybrid / Mixed Funds )Hybrid/Mixed Fund(

• Risk: Moderate
• Invests in: a mix of stocks and bonds )adjustable proportions(
• Suitable for: hesitant investors wanting diversification within a single fund

5. Alternative Investment Funds )Alternative Investment Fund(

• Risk: Very high
• Invests in: gold, oil, real estate, infrastructure
• Suitable for: experienced investors seeking advanced portfolio diversification

) Based on Special Investment Policies###

• Index & ETF (Index & ETF) - Track an index, low fees
• Sector Funds (Sector Fund) - Focus on a specific industry, high risk but high return
• Foreign Investment Funds - FIF (Foreign Investment Fund (FIF)) - Diversify into global markets like the US, China, Vietnam, Europe
• Tax Incentive Funds (Tax Incentive Funds) - SSF, RMF, ThaiESG with holding conditions but tax benefits

How to Choose Mutual Funds Wisely

Step 1: Self-Assessment Before Looking Outside

Answer 3 key questions:

• Investment goals: Retirement? Car purchase? Children’s education fund? Different goals lead to different fund choices
• Time horizon: The longer, the higher risk you can accept
• Risk tolerance: How comfortably can you sleep if your portfolio drops 10-20%?

Step 2: Study Investment Policy

Read the Fund Fact Sheet to see what assets the fund invests in, which countries, and whether it uses active or passive strategies

Step 3: Analyze In-Depth Data

• Past performance: Compare with benchmark and other funds in the same group (but remember that past performance does not guarantee future results)
• Maximum Drawdown: Largest historical loss - are you prepared for it?
• Sharpe Ratio: Measures risk-adjusted return; the higher, the better
• Fees (TER): The lower, the better, as it impacts long-term net returns

10 Mutual Funds to Watch in 2569

The economic outlook for 2569 may be divided into two phases - the first half might face volatility, but the second half is expected to recover. A key megatrend is AI, boosting industries like energy, infrastructure, and chip processing.

Thai dividend equity funds: Defensive stance amid volatility

1. Siam Commercial Bank Thai Equity Dividend Fund (SCBDV)

• Managed by: SCB Asset Management
• Invests in: Thai large-cap stocks with consistent dividends
• Suitable for: Those seeking cash flow and comfortable with stock market volatility
• Risk level: 6/8+

2. Krungsri Dividend Equity Fund (KFSDIV)

• Managed by: KSAM
• Invests in: dividend-paying stocks from large to small cap
• Suitable for: investors willing to accept slightly higher risk for growth opportunities
• Risk level: 6/8+

International Equity Funds: Riding the tech wave

3. KT World Technology AI Fund (KT-WTAI-A)

• Managed by: KTAM (Feeder Fund)
• Invests via: Allianz Global Artificial Intelligence
• Invests in: AI companies worldwide
• Suitable for: long-term believers in AI potential
• Risk level: 6/8+

4. Bualuang Global Innovation & Technology Fund (B-INNOTECH)

• Managed by: BBLAM (Feeder Fund)
• Invests via: Fidelity Global Technology Fund
• Invests in: leading tech companies, cloud computing, e-commerce, fintech
• Suitable for: growth-oriented investors aligned with tech markets
• Risk level: 7/8+

5. Principal Vietnam Equity A (PRINCIPAL VNEQ-A)

• Managed by: Principal Asset Management
• Invests in: Vietnamese banks, retail, technology stocks
• Suitable for: investors interested in emerging markets and Vietnam’s growth potential
• Risk level: 6/8+

Bond Funds: Strengthen portfolios during market volatility

6. Krungthai Short-Term Bond Plus Fund (KTSTPLUS-A)

• Managed by: KTAM
• Invests in: bonds and investment-grade deposits with an average maturity under 1 year
• Suitable for: low-risk investors, short-term cash holding
• Risk level: 4/8+

Flexible Mixed Funds: Adapt to market conditions

7. TISCO Flexible Plus Fund (TISCOFLEXP)

• Managed by: TISCO Asset Management
• Invests in: a mix of stocks and bonds, 0-100% depending on market outlook
• Suitable for: confident in manager’s skill and seeking flexibility
• Risk level: 6/8+

Themed Funds: Invest in world-changing trends

8. Krungsri ESG Climate Tech Fund (KFCLIMA-A)

• Managed by: KSAM (Feeder Fund)
• Invests via: DWS ESG Climate Tech
• Invests in: environmental companies, clean energy, electric vehicles
• Suitable for: long-term environmental theme investors
• Risk level: 6/8+

9. K Global Healthcare Fund (K-GHEALTH)

• Managed by: KAsset (Feeder Fund)
• Invests via: JPMorgan Global Healthcare Fund
• Invests in: pharma, medtech, healthcare providers
• Suitable for: steady growth with a defensive stance
• Risk level: 7/8+

10. Asset Plus Sustainable Thai Equity (ASP-THAIESG)

• Managed by: Asset Plus Fund Management
• Invests in: high-quality Thai ESG stocks according to SET ESG Rating
• Suitable for: investors seeking quality Thai stocks with sustainability focus
• Risk level: 6/8+

Pros and Cons of Mutual Funds

Advantages

• Diversification across various assets
• Managed by professionals
• High liquidity, tradable daily
• Easy access, low minimum investment
• Wide variety of options

Disadvantages

• Fees deducted from returns
• No direct control over individual stock selection
• Performance depends on fund manager’s skill
• Dividends are subject to 10% withholding tax

Fees to Watch Out For

Direct Fees:

• Sales charge: paid when purchasing units (e.g., 1.5%)
• Redemption fee: paid when selling units
• Switching fee: when transferring between funds

Hidden Fees (embedded in NAV):

• Management fee
• Trustee fee
• Registrar fee

Total expenses are called Total Expense Ratio (TER). Comparing TERs is important because even a 1% difference per year over 20-30 years can significantly impact the final amount, sometimes by tens of percent.

Summary

Mutual funds are powerful tools for wealth creation. In 2569, amid challenges and opportunities, selecting funds aligned with global megatrends, understanding yourself, analyzing data, and paying attention to fees will be key to building a successful long-term investment portfolio.

Investing in mutual funds is an excellent starting point on your journey toward financial wealth.