In an era of high economic and investment uncertainty, characterized by 'three good years, four bad years', achieving consistent returns has become increasingly challenging. The ongoing trend of low global interest rates further complicates the search for investment options that yield good returns.

For investors who are risk-averse, diversifying their investment portfolio is one of the key strategies to reduce volatility in investment returns. At the same time, they should aim for returns that can outpace inflation in the long run. One interesting option for such investment purposes is the K-PLAN3 open-end fund.

The K-PLAN3 fund focuses on diversifying investments across both debt securities and equities, as well as deposits, with a maximum investment in equities not exceeding 55% of the fund's net asset value. The fund can allocate up to 30% of its net asset value to international investments and hedge against exchange rate risks by at least 90%. It may also invest in futures contracts to enhance investment management efficiency.

With this investment policy, the K-PLAN3 fund is classified as having a medium to high risk level, rated 5 out of 9 levels, resulting in a volatility of only 8.4% per year, while the average annual return of the fund over the past 10 years is 5.43%. In contrast, the returns over the past 5 years since 2015 have been -0.79% in 2015, 12.18% in 2016, 9.84% in 2017, -6.28% in 2018, and 3.82% in 2019, with this year's return at -3.23%. Additionally, when considering annual returns over the past 10 years, it is notable that there were only 3 years with negative returns, the largest being -6.28% in 2018.

As of June 30, 2020, the fund's current investment portfolio is composed of 40.37% equities, 24.25% corporate bonds or commercial papers, 14.43% government bonds, 6.27% financial institution bonds or commercial papers, 2.39% deposits, and 2.33% others.

In detail, the top 5 equity investments of the fund include the K Global Equity Passive Fund at 5.2%, PTT Public Company Limited (PTT) at 4.06%, Airports of Thailand Public Company Limited (AOT) at 2.59%, the K China Equity Index Fund at 2.51%, and the K US Equity NDQ 100-A Dividend Fund at 2.25%.

Meanwhile, the top 5 debt investments include government bonds at 9.24%, Bank of Thailand bonds at 4.52%, bonds from Berli Jucker Public Company Limited (BJC) at 3.91%, bonds from Thai Beverage Public Company Limited (TBEV) at 2.93%, and bonds from Land and Houses Public Company Limited (LH) at 2.72%.

However, the fund has not performed as well in terms of returns and risk compared to its benchmark, with the fund's return since inception at 5.82% per year while the benchmark stands at 6.69%. The fund's volatility is at 8.85%, exceeding the benchmark's 7.88%.

Currently, the total fees and expenses of the fund are charged at 1.22%, primarily consisting of a management fee of 1.07% of NAV.

Although the returns of K-PLAN3 may not be as outstanding as the long-term returns from equity investments, which average around 10-12%, the trade-off is lower return volatility due to diversification across both debt and equity securities, as well as partial international diversification. This type of investment is likely suitable for investors seeking a long-term savings-like investment that can preserve the value of their money against inflation.

SOURCE : www.bangkokbiznews.com