Honorary Award, Best Fund of the Year 2568, Provident Fund, Fixed Income Fund (RMF Fixed Income Fund) and Thai Sustainable Mutual Fund (Thai ESG Fund), Kiatnakin Phatra Asset Management Co., Ltd.

Kiatnakin Phatra Asset Management prioritizes systematic decision-making. Every step is clear, repeatable, and bias-free, based solely on real data and figures. This results in sound investment discipline, leading to outstanding performance.

Kiatnakin Phatra Asset Management Co., Ltd. received the Best Fund of the Year 2568 award in the category of Retirement Mutual Fund, Fixed Income Fund (RMF Fixed Income Fund), namely the KKP Income Retirement Mutual Fund, General Type (KKP INRMF), and the Thai ESG Fund, namely the KKP Thai Government Bond Sustainable Fund (KKP GB THAI ESG).

Ratthaphon Khattiyasuwong, Assistant Managing Director, Head of Debt Instrument Investment Team, KGI Securities He expressed his feelings about receiving the award, saying that he felt honored and proud of the entire KGI Asset Management team. It reflected his determination to work hard to create good returns for investors in a time of high economic volatility.

Adhere to the Value Investing philosophy
Create positive results for investors

Ratthaphon stated that KGI Securities' fund management principles are not limited to the two award-winning funds, but rather cover all funds under the same philosophy: Value Investing. This year, with interest rates trending downward, funds investing in long-term debt instruments have consistently performed well.

In terms of processes and personnel, KGI Securities has a team that rigorously analyzes the credit quality of debt instruments, particularly corporate debt instruments. Recently, some companies have experienced debt repayment difficulties, raising concerns about corporate governance. KGI Securities' debt instrument selection process incorporates ESG (Environmental, Social, and Governance) considerations, which helps avoid investing in instruments with issuers that pose risks in these areas.

“The fund management team at KGI Securities prioritizes systematic decision-making. Every step is clear, repeatable, and bias-free, based solely on real data and figures. This results in sound investment discipline, leading to outstanding performance.”

Screening quality instruments with ESG lenses

Ratthaphon explained the principles for selecting debt instruments from an ESG perspective. He explained that while there aren't many ESG-related instruments in general, if we view ESG as a credit risk that doesn't appear in financial statements, requiring assessment from external factors, we can incorporate ESG into the analysis and selection of all instruments.

Kiatnakin Phatra Asset Management's selection principle states that if all three ESG components are not good, the investment will not be selected. This is especially true in Thailand, where governance is paramount. Therefore, the debt instruments selected for investment must be of high quality and have a credit rating of BBB+ or higher in the investment grade group to act as a buffer in the event of a downgrade.

Credit quality is determined by two key factors: business strength and cash flow, which are fundamental considerations for investors. Equally important is short-term liquidity. Ratthapol emphasized that even if a company has demonstrated strong past performance over decades, if it fails to manage its current short-term liquidity or performs poorly in a volatile capital market environment, it could cause problems overnight.

Ratthaphon believes the Bank of Thailand (BOT) will continue to cut the policy interest rate under the current circumstances. Kiatnakin Phatra Asset Management's investment policy will continue to focus on select debt instruments that still have value. Furthermore, bond yields are expected to decline further. Therefore, the company will continue to search for high-quality instruments. Although the current price of corporate bonds in the market is relatively price-to-perfection, as no one is concerned about default, the credit spread, or the difference in returns between corporate bonds and government bonds with similar remaining maturities, must compensate for the increased risk.

However, the demand for investment-grade corporate bonds has increased while the supply (issuers) has decreased. Going forward, KGI Securities (KGI) may need to consider increasing its investment in government bonds, pending the economic recovery driven by various factors in 2569.

"Next year, the global economy is expected to remain subdued. This is evidenced by negative macroeconomic factors impacting the global economy, including US President Donald Trump's tax policies and the ongoing wars. Domestic factors also appear less positive. Thai tourism this year is worse than expected, coupled with political uncertainty."

Increase investment weight in bonds by 50%

Ratthaphon stated that currently, bond funds under the management of Kiatnakin Phatra Asset Management have a bond investment weight of approximately 50%, which is higher than average. However, if the situation returns to normal, this will be adjusted down to 30-40%. If the global economy remains uncertain, the 50% ratio may need to remain stable for approximately two years.

The outlook for the Thai economy is not optimistic, as the tourism sector, once a key driver, is not performing as well as it should. Furthermore, exports are expected to contract in the second half of the year due to US tariffs, leading to a projected GDP growth of less than 2% and perhaps even 1.5% this year. Given this current situation, we must rely on government measures, as current fiscal stimulus measures are relatively limited and have not delivered as expected. Regarding further stimulus, there is little room for additional borrowing.

However, from a monetary policy perspective, Ratthaphon believes there is still room for stimulus, as Thailand's current inflation rate is below the previously projected target, but it is not yet deflationary. He believes the Bank of Thailand can still lower interest rates, as inflation is currently not a serious concern.

Another important issue is the recent contraction in credit in the system, a situation unprecedented since the 2540 Tom Yum Kung crisis. This situation is directly linked to GDP growth. Therefore, the Bank of Thailand is expected to control credit contraction appropriately and avoid excessive contraction in all sectors. For example, it will encourage business lending, particularly for medium- and large-sized businesses with strong business operations, which can access funding more easily. This will support the economy during this downturn.

Recommended bond funds

Regarding investment advice in the current situation, Ratthaphon stated that medium- to long-term investments are expected to yield better returns than short-term investments. Given the expected decline in interest rates, long-term debt instruments benefit from mark-to-market adjustments. When interest rates fall, debt instrument prices rise, resulting in capital gains for bondholders. Furthermore, investments in medium- to long-term debt instruments naturally have wider credit spreads than short-term debt instruments.

Kiatnakin Phatra Asset Management recommends three debt funds for medium-term investment, or approximately two years. The KKP ACT FIXED open-ended fund is recommended at risk level 3, with an investment policy of investing in both domestic and international debt instruments. The fund may invest no more than 2% of its net asset value (NAV) abroad. For long-term investment, the two award-winning funds are recommended: KKP INRMF and KKP GB THAI ESG.

The KKP INRMF, with a risk level of 4, focuses on investing in domestic debt instruments, both government and private sector, with an emphasis on management to maximize returns within an appropriate risk framework. The fund aims to select private sector debt instruments with sound fundamentals and sound financial position, both for short-term liquidity and long-term financial stability.

The KKP GB THAI ESG Fund, with a risk level of 3, focuses on investing in Thai debt instruments related to ESG. The investment portfolio is flexible and allows for adjustments to investment duration management to identify opportunities for higher returns relative to appropriate risk.

Ratthaphon also advises investors not to attempt market timing during this time. He urges them to consider the long-term outlook for their investment goals. While you're still young, you can invest in high-risk assets. However, if you're investing for retirement, you need to set a target retirement date and a timeframe for your investment. You might consider lower-risk assets, such as bonds.

Warning: Investors should understand the product characteristics, return conditions, risks, and study information on tax benefits specified in the RMF and THAI ESG fund investment manual before deciding to invest. If tax conditions are not followed, benefits under the fund's conditions will not be received. Past performance is not indicative of future performance. You can request a prospectus and additional information at https://am.kkpfg.com

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