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INVESTING MUTUAL FUNDS AND PROPERTY

MFC may expand services

Consultancy, equity funds may be offered

NUNTAWUN POLKUAMDEE
MFC Asset Management will consider expanding into investment advisory services, private equity funds and securities brokerage in the future, if regulatory constraints are eased.

President Pichit Akrathit said asset management companies were currently quite limited in their business scope.

''Asset management firms can only manage assets, compared to securities brokers or banks that are also able to offer advisory services and soon will be able to directly invest abroad,'' he said.

But the Securities and Exchange Commission continues to restrict asset management firms from expanding their scope to areas such as venture capital, non-listed shares and private equity.

''For instance, the SEC allows us to open property funds, but not actually manage property, buy land or borrow funds to invest in property funds,'' Dr Pichit said. ''I think that if we are allowed to manage property, we could cut our operating costs. We should be allowed greater room to move.''

The SEC last month announced that the securities sector would be fully liberalised by 2012, with new licences offered freely and trading commissions fully negotiable with clients.

But Dr Pichit said asset managers should be given greater flexibility to expand now, otherwise they would face growing constraints in the future in competing with established brokers and banks.

He said fund managers faced lengthy delays before new fund types could be approved, due to strict SEC regulation.

''I think the asset management industry hopes the SEC will move forward with market development plans rather than simply focus on enforcement,'' he said.

Stringent rules on bond issuing also constrained market growth, he added.

''I think that many good companies should have the chance to raise funds without necessarily securing a credit rating, particularly for short-term debt instruments,'' he said.

''Most mutual funds have their own internal systems in assessing the risk of different asset classes. But because of one problem with short-term debt instruments, the SEC decided to close all the windows for the market.''

MFC yesterday announced plans to increase the MFC-Nichada Thani Property Fund (MNIT) to 1.38 billion baht from 710 million to invest in two new housing projects in Nonthaburi.

The fund will invest in the Sunshine Place and Raintree Residence projects at the Nichada Thani site. New units are on offer to existing investors from last Monday until Dec 7, and will be offered to new investors from Dec 8-15.

Dr Pichit said the fund offered investors stable returns as the project was near the ISB International School and the civil service complex on Chaeng Watthana Road.



MNIT projected annual returns of around 56 million baht from its five-year rental agreements, Dr Pichit said, with returns not based on actual occupancy.

Sudhipongse Phuaphanprasert, an MFC senior property fund manager, said the project was located in one of the highest-potential areas in Bangkok.

MNIT's policy is to pay at least 90% of revenue as dividends to unitholders, with projected returns of around 8.1% per year.

As the fund's assets were freehold land, apartments and single homes, it could also profit in the future by selling off property if market prices were to rise, Mr Sudhipongse said.
MNIT was established on July 7, 2005 as MFC's first property fund for general investors. Its investments include two lakeside apartment buildings, Lakeshore West Apartment and Lakeshore North Apartment, located at Nichada Thani.