The Association of Investment Management Companies (AIMC) expects around 50 Thai ESG (TESG) funds to be available by year-end, attracting new fund inflows of more than 25 billion baht, increasing assets under management (AUM) in such funds to 37 billion baht.
There are currently 42 TESG funds from 16 asset management companies available to investors, each offering tax deductions for investment, said AIMC chairwoman Chavinda Hanratanakool.
The majority of TESG funds are equity funds, with the tax deductible amount and holding period revised to make them more appealing to investors.
The association expects around 50 TESG funds will be available by year-end, she said.
TESG funds can invest in stocks focused on the environment, social and governance (ESG) issues, which includes roughly 200 of more than 800 securities listed on the Stock Exchange of Thailand (SET).
Since the holding period for TESG funds was adjusted from eight years to five, investors have expressed greater interest in these funds, said Mrs Chavinda.
AIMC anticipates 20-30 billion baht in new investment in TESG funds annually, she said.
This year, AIMC expects to expand its investor base in TESG funds by about 200,000 people via various channels, including marketing campaigns carried out by asset management firms. Most investors tend to purchase tax-saving funds in December.
Mrs Chavinda said another tax-saving fund option is the super savings fund (SSF), though 2024 could be the final year for this product.
The AIMC is waiting to see whether the Finance Ministry will consider extending the SSF scheme.
SSFs have a holding period of eight years and they can invest in both stocks and debt instruments in Thailand and overseas.
Together with investments in retirement funds, other long-term funds and life insurance policies, investors can deduct taxes of up to 800,000 baht a year through their investments.
TESG funds will help encourage listed firms to be more aware and prioritise ESG issues, she said, adding firms issuing debt instruments in the sustainability group are expected to grow.
Kasikorn Asset Management has AUM of around 3 billion baht, representing 25% of the total TESG market.
With continued government support in terms of savings funds and other measures, Mrs Chavinda said the SET index should gradually recover to finish at 1,500 points by the end of 2024, rising to greater than 1,600 points next year.