Types of mutual fund ( Sor Nor. 22/2552 )

1. Classified by structure:

1.1 Closed-end fund refers to a mutual which offers investment units only during the initial public offering and redeems the units when the scheme reaches its maturity.

1.2 Open-end fund refers to a mutual fund which offers and redeems investment units throughout its life, as specified in the scheme (constitutive documents).

2. Classified by investment policy:

2.1 Equity fund refers to a mutual fund with the objective to invest in or hold equity instruments on average in any accounting period not less than 65% of the net asset value of the mutual fund. Equity instruments include, for instance, ordinary shares of companies, shares of listed companies and share warrants, etc.

2.2 Fixed income fund refers to a mutual fund which invests in fixed income instruments such as bonds, treasury bills, certificates of deposit, promissory notes, bills of exchange, debentures, etc. Fixed income fund may not invest in shares or share warrants.

2.3 Balanced fund refers to a mutual fund the objective of which is to invest or hold equity instruments at any particular time not less than 35% but not more than 65% of the net asset value of the mutual fund. This fund invests in both equity and fixed income instruments.

2.4 Fund of fund refers to a mutual fund which invests the pooled funds in investment units of mutual funds set up by other asset management companies.

2.5 Money market fund refers to a mutual fund with investment policy to invest in or hold high quality fixed income instruments, repayment of which is callable or time to maturity is less than 1 year.

2.6 Guaranteed fund refers to a mutual fund the capital or capital and return of which is guaranteed by a financial institution and organised by the management company. The guaranteed amount will be paid to unitholders upon the end of holding period specified.

2.7 Capital protected fund refers to a mutual fund investment plan of which has been made by the management company with the objective to protect unitholders’ capital.

2.8 Index fund refers to a mutual fund with the objective to provide investors with return that is linked (“tracking”) to securities indices as prescribed in the mutual fund management scheme.

2.9 Foreign investment fund (FIF) refers to a mutual fund with a policy to invest the pooled funds in securities overseas. FIF adds another variety of investment choice to investors and can be used as a diversification tool for their investment risk to a certain level. Investors should, however, bear in mind that there are risks involved in foreign investment such as foreign exchange risk (risk arising from the fluctuation of exchange rates) and market risk of the country of investment.

2.10 Retirement mutual fund (RMF) refers to a mutual fund set up with the objective to promote long-term savings for retirement of unitholders. RMF may be used as a tax relief following the conditions specified by the Revenue Department.

2.11 Long Term Equity Fund (LTF) refers to a mutual find which invests substantially in shares. LTF was established as a measure to encourage long term investment in listed stocks in the Stock Exchange of Thailand by non-retail investors (including mutual funds). Such measure helps bringing more stability in the Thai capital market. Individuals can enjoy tax benefit from investing in LTF, as it may be used as a tax relief.

2.12 Country fund refers to a mutual fund whose investment units are exclusively offered to non-Thai residents.

2.13 Exchange traded fund (ETF) refers to an open-end mutual fund that the management company offers the investment units to and accepts redemption from authorised participants only and provides an organised market (e.g. the Stock Exchange of Thailand) as a platform for retail investors to trade investment units. Management company should arrange to have at least one market maker to readily buy or sell investment units in the organised market so as to keep ETF price in line with the fund’s underlying net asset value.

2.14 Sector fund refers to a mutual fund which invests in a particular industrial sector with the average of no less than 80% of the net asset value of the fund in each accounting year.

2.15 Gold fund refers to a mutual fund whose main objective is to provide return from investment in gold bullion.

There are also mutual funds which are set up for specific purposes, as follows:

2.16 Property fund refers to a mutual fund established specifically to, with the pooled funds received from offering investment units to the public, buy and earn benefits from a freehold or leasehold of a property.

2.17 Thai Trust Fund is a mutual fund established to facilitate investments made by foreigners by alleviating the constraints on foreign shareholding limit in the SET.

2.18 Infrastructure Fund