Krungsri Asset Management is now offering an alternative investment opportunity for investors that will generate greater returns despite current low interest rates. The opened-end Krungsri Global Smart Income Fund (KF-SINCOME) and the Krungsri Global Collective Smart Income Fund (KF-CSINCOM) have been introduced to boost investors’ earnings via high-quality fixed income securities across the world.
Ms. Siriporn Sinacharoen, Managing Director of Krungsri Asset Management Company Limited (KSAM) (Picture: Most left), recently presided over a seminar on the topic “Get ahead of the low rates. Win the Race of Investment,” which was held at Access Place, Ploenchit Tower. The seminar was aimed at urging investors to seek alternative investments in fixed income securities, which are more suitable for those who don’t want to take high investment risks while the world is currently in a period of low interest rates and the global economy is still relatively unstable. To educate investors about the benefits, KSAM invited Mr. Todd Alan Staley, CFA and Senior Vice President of PIMCO Asia Pte Ltd- one of the world's leading fund houses which specializes in fixed income investments, to extend his knowledge on various types of fixed income securities, strategies and selection methods for high-quality bonds, and risk management strategies. KSAM’s Vice President for Alternative Investment Department, Ms. Chatkaew Groatong, was also invited to give the benefit of knowledge and reasons behind KSAM’s selection of PIMCO GIS Income Fund as the master fund which investors can invest in through open-ended KF-SINCOME and KF-CSINCOM.
Ms. Chatkaew noted that current global forecasts regarding the economy say that it will be in decline for some time longer, and central banks worldwide are continuing to adopt low interest rate policies, making any returns on investments smaller. Meanwhile certain equity investments are still seen as risky. This is why investments in fixed income securities are becoming more popular. However, most Thai bonds can only offer a relatively low return. So, after far-reaching research to find alternatives, KSAM has found various foreign bonds such as mortgage backed securities, corporate high-yield bonds and other asset types that can provide steadier and more satisfactory yields. PIMCO GIS Income Fund is a leading fixed income securities fund with a global-record performance, so KSAM chose it as a master fund and as an alternative investment opportunity for Thai investors.
Mr. Todd said that the main objectives of PIMCO GIS Income Fund are to seek consistent, high levels of current income with long-term capital appreciation from the assets in which it has selectively invested. The fund selects and incorporates a broad range of fixed income securities across the world into its investment portfolio as a means to diversify any risks into many asset classes. The flexibility of management is adopted to adjust its investment portfolio so as to keep pace with any changes in economic conditions for safety while maintaining a relatively low risk profile.
PIMCO GIS Income fund, the master fund of KF-SINCOME and KF-CSINCOM, was launched on 30 November 2012. We have used the PIMCO Income Representative Account for illustrative purposes only, to demonstrate how the PIMCO Income strategy has performed during the periods of rising rates over the last 5 years, before the launch of the PIMCO GIS Income Fund. This account was chosen because it closely resembles similar portfolio characteristics to the PIMCO GIS Income Fund. No direct comparison should be made between performance of the PIMCO Income Representative Account and the PIMCO GIS Income Fund, and no representation is being made that similar results have been achieved or will be achieved in the future. This shows the performance of the representative account of the master fund, so it is not complied to AIMC’s standard. Remark: Please study fund features, performance, and risk before investing. Past performance is not an indicative of future performance.
According to Mr.Todd, PIMCO's investment strategy combines an active and flexible style with top-down and bottom-up approaches. For top-down strategy, the fund regularly liaises with key persons in the global financial industry so that macroeconomic outlook and direction can be analyzed. As a result, PIMCO looks to forecast and adjust its investment policy to suit current economic conditions while seeking to achieve consistent, high levels of income and long term capital appreciation. From a bottom-up perspective, PIMCO global team of portfolio managers and analysts with significant experience seek to identify global fixed income securities that may offer more attractive risk adjusted returns than other fixed income securities. The PIMCO team uses their global presence, industry expertise and deep market knowledge in the selection of securities for the fund's portfolio.
Currently, PIMCO GIS Income Fund seeks to build a diversified portfolio and currently holds 11 types of fixed income securities in its investment portfolio. The portfolio allocates to securities which are higher quality in nature (e.g. government bonds), while also allocating to securities that have higher yields. The fund also manages interest rates risks by investing in wide range of fixed income securities including floating rate securities and securities outside the United States. As of August 31, the interest rate exposure was approximately 2.5 years. The portfolio has the flexibility to increase or decrease the interest rate exposure in the portfolio from 0 to 8 years. Currently, the fund holds investments in the US housing market which is now recovering thanks to a stronger US economy. It also invests in high-quality bonds in other countries like Australia and emerging markets where economies show sign of recovery.
In addition, PIMCO GIS Income Fund (Institutional Accumulation shareclass USD) is rated five star by Morningstar. (Source: Morningstar rating from PIMCO as of 31 July 2016). Since its establishment outside the United States in 2012, the fund has made average distributions of approximately 4% and generated long term capital appreciation. (Source: PIMCO as of 31 August 2016 | Past performance is not an indicative of future performance.)
Investors who are interested can make investments through KSAM’s opened-end KF-SINCOME and KF-CSINCOM funds. Both funds have a policy to mitigate foreign exchange risks at no less than 90% of their assets. Their unit trading can be made every trading day. Both funds invest in PIMCO GIS Income Fund (“The Master Fund”) with policy to invest at least two-third of its assets in a diversified portfolio of Fixed Income Instruments of varying maturities across a broad range of global fixed income securities. Both funds have risk level at 5: Medium to high risk.
A difference between these two funds is that the KF-SINCOME units will be automatically redeemed and switched to KFCASH every three months*. This means that the fund suits investors who need ready cash flow. On the other front, KF-CSINCOM will bring returns for reinvestment, suiting those who want to accumulate returns in the fund. KSAM trusts that with these alternative funds, Thai investors will make sound investments, while having fewer concerns over risks and gaining higher returns than interest rates.
*Return payout of KF-SINCOME is based on the master fund’s performance, so investors might not receive consistent return at some period of time.
Investors can ask for more details on the Fund or ask for Fund Factsheet at
- Krungsri Asset Management Company Limited, call 0-2657-5757; or
- Any branch of Bank of Ayudhya; and
- Distributors of investment units on behalf of Krungsri Asset Management Company Limited
Remark: Bank of Ayudhya Public Company Limited (as a distributor of investment units on behalf of Krungsri Asset Management Co., Ltd. only)
Disclaimers
1. Investors should carefully study fund features, performance, and risk before making an investment decision. Past performance is not a guarantee of future results.
2. Krungsri Asset Management Co., Ltd. (“The Management Company”) believes the information contained in this document is accurate at the time of publication, but does not provide any warranty of its accuracy. Similarly, any opinions or estimates included herein constitute a judgment as of the time of publication. All information, opinions and estimates are subject to change without notice.
3. Krungsri Global Smart Income Fund and Krungsri Global Collective Smart Income Fund may have risks from economic and/or political and/or social changes in the country where the master fund invested in.
4. The funds will enter into a forward contract to hedge against the exchange rate risk at a particular time for the value of at least 90% of the foreign investment value, in which case, it may incur costs for risk hedging transaction and the increased costs may reduce overall return.
5. The fund and/or master fund may invest in or make available a forward contract to enhance efficiency in investment management. This means the fund may contain higher risks than other funds and therefore the fund is suitable for investors who prefer higher return with higher risk tolerance than general investors. Investors should make investment only when they understand the risks of the contract by considering their investment experience, investment objectives and financial status.
6. The fund and/or master fund may invest in non-investment grade debt securities or unrated debt securities. The investors may be exposed to the issuer’s default risk which results in loss of entire or partial investment and, upon redemption, may not receive full refund of investment amount specified in the prospectus.