Oil mutual funds generated the best returns last year

Money Expo 2021 is organised at Impact convention and exhibition complex in Nonthaburi province in December last year. (Photo: Chanat Katanyu)

Oil mutual funds posted the highest average return of 65.9% in 2021, spurred by the rise in oil prices based on low supply and higher demand, according to Morningstar Research Thailand.

Second were Thai mid- and small-cap equity funds, followed by Indian equity funds and US equity funds, which provided average returns of 27.4%, 26.2% and 21%, respectively.

In 2022, foreign equity funds are expected to continue to do well, though investors should monitor the US interest rate hike and major central banks’ monetary policies, said Chayanee Juengmanon, a senior research analyst at Morningstar Research Thailand.

Ms Chayanee said returns on oil funds usually fluctuate in accordance with the oil prices, which are highly volatile. In 2020, oil funds’ average return was -35.2%, while in 2019 it stood at almost 25%.

Thai mid- and small-cap equity funds also performed better last year as the local economy started to recover from a recession caused by the third wave of the pandemic, she said. Thai large-cap equity funds’ average return amounted to 16.1% in 2021, up from -11% in 2020.

US equity funds continued to deliver outsized returns last year, said Ms Chayanee.

She said Kasikorn Asset Management recorded the highest net inflow worth about 40 billion baht last year. Its funds mostly invest in retirement mutual funds and super savings funds.

Coming in second was Kiatnakin Phatra Asset Management, which saw net inflow of 37 billion baht, while Krungsri Asset Management posted net inflow of 28 billion, said Ms Chayanee.

She said foreign equity funds have high growth prospects in 2022. Prominent trends include investment in environmental, social and governance stocks as well as sustainable investment, as businesses in many sectors are placing more value on sustainability.

The Securities and Exchange Commission is also in the process of issuing criteria for future product launches, said Ms Chayanee.

She said investors should monitor the Federal Reserve’s policy rate hike, which will pressure sentiment in the fund market. Bond yields will rise while returns from stocks will decline if the Fed continues to raise rates this year, said Ms Chayanee.