Thread: Future Investment Opportunity

Thailand's Biggest Mutual Fund Company Embraces AI
By Anuchit Nguyen (Bloomberg)October 22, 2019, 5:00 AM GMT+7

• SCB Asset to offer funds with overseas equity investments
• SCB Asset expects higher earnings with more active funds

Thailand’s biggest mutual fund company, will start offering more equity funds using artificial intelligence technology to identify investments as it seeks to lure new customers and retain clients.

New investment tools such as AI, data analytics and program trading will enable SCB Asset to later this year start selling its own funds to invest in overseas equities, said Narongsak Plodmechai, who oversees about 1.5 trillion baht ($50 billion) of assets as chief executive officer of SCB Asset. The new funds would allow the company to command higher fees, he said.

“Before being disrupted, we have to create our own super-star funds using advanced technology,” Narongsak said in an interview Friday. “We are building robot trading and data analytic systems that will take us to new landscapes.”

Artificial intelligence, used for applications ranging from online customer support to facial recognition and self-driving cars, can enable funds to pivot in and out of assets without human bias or internal approval delays, according to Narongsak.

AI-based trading is still at its infancy in Thailand compared with developed markets such as the U.S. Narongsak is developing an internal model that his team will use to trade equities in Southeast Asian markets, before expanding to other Asian stocks and eventually globally.

Economic data, corporate earnings, news and regulations are among inputs that will generate machine-based investment decisions, according to Narongsak. AI-based active equity funds will help boost SCB Asset earnings by commanding higher management fees than money market and index funds, he said. The firm has cut the proportion of lower-fee funds to about 60% of its total assets from about 85% in 2017, he said.

Total assets of all mutual fund companies in Thailand grew 0.8% in 2018, slowing from a 7.9% increase in 2017 and a 14% rise in 2016, according to data from the Association of Investment Management Companies. In the first nine months of this year, inflows into mutual funds rose 4.5% from a year earlier to 5.28 trillion baht, the data showed.
SCB Asset currently channels its clients’ overseas equity investments into funds overseen by money managers including BlackRock Inc. and Nomura Holdings Inc., according to its website. It will seek to convince customers to instead invest in its new actively-managed overseas funds, Narongsak said. The firm is a unit of Siam Commercial Bank Pcl, whose biggest shareholder is King Maha Vajiralongkorn.

SCB Asset’s best performing fund is SCB SET Energy Sector Fund, which has gained 14% this year, according to data on 302 equity funds compiled by Bloomberg. The top five equity funds have added at least 30%, the data showed.

Narongsak’s other plans include:

• Aims for SCB Asset to become the nation’s “top manager of active funds” in 5 years
• Plans hedge funds, once allowed by local regulators
• Focusing on short-term equity trading strategy to boost funds’ performance