Since its launch in August 2020, AIA Investment Management Thailand (AIAIMT), a subsidiary of AIA Thailand, has successfully positioned itself as a leading asset management company with total assets under management (AUM) of around 853 billion baht, ranking in the country's top five in terms of asset size.
Mr Sukkawat said AIAIMT was formed primarily to support AIA Thailand's management of assets.
The company is also overseeing the country's largest private fund with an AUM of around 817 billion baht. The fund was transferred from AIA Thailand after AIAIMT was established last year and is 90% weighted in bonds and 10% in global and Thai stocks.
In general, the company believes that stocks will generate higher returns than other investment instruments in the next 3-6 months.
According to Sukkawat Prasurtying, chief executive of AIAIMT, the company was established primarily to support AIA Thailand's management of assets.
However, AIAIMT has been very successful in expanding its business and has launched 11 new mutual funds which have garnered an inflow of around 31.5 billion baht to date, surging 4,700% from 715 million baht during the same period last year.
The mutual funds consist of five domestic investment funds and six foreign investment funds.
In terms of foreign investment funds, AIAIMT has cooperated with three global business partners with expertise in investment management, namely Wellington Management, Baillie Gifford, and BlackRock.
Mr Sukkawat said the private fund under AIAIMT management has a market share of 39.71%, the highest in the industry, and has recorded continual growth even amid the peak of the pandemic. AIAIMT aims to reach a trillion baht in AUM.
AIAIMT's customer base consists mostly of long-term life insurance customers from AIA Thailand so investments in the company's funds must also be long-term so they provide returns when the policies expire, he said.
Mr Sukkawat said the developed stock markets will continue to recover and reach their full potential for growth while most emerging markets will continue to bear the brunt of the pandemic.
The growth disparity will propel each country to develop different monetary policies in the future.
While the developed markets may consider reducing government support measures after the global economy shows clear signs of recovery, such as the Federal Reserve's imminent tapering of its asset purchases, the emerging markets may still rely on government stimulus to help support the economy.
Global capital markets may be temporarily volatile during this time of diverging patterns of economic growth, he said.
In the short term, he said US bond yields will remain low due to the current pressure on the volume of new bond issuance while liquidity in the money market remains high.
However, when the Fed begins tapering or reducing its liquidity injection through the purchase of US bonds, the treasury bond yields will rise, reflecting the US economic recovery.
Mr Sukkawat said AIAIMT has a brighter outlook for equities than bonds, especially equities in the developed markets, led by the US and European stock markets, because they have high excess liquidity that will allow stocks to have better returns than bonds.
Cyclical stocks with steady growth and laggard prices are also interesting and generate better returns. They can balance out an investment portfolio in times of high market volatility, Mr Sukkawat said.
In addition to foreign markets, the Thai stock market also has a better chance for growth after the number of daily Covid-19 infections started to decrease while the vaccination rate rises and the lockdown measures are relaxed.
The recovery of the global economy has supported the growth of several key Thai industrial sectors such as energy, basic goods, and finance, although the recovery of the service sector, including tourism and domestic spending, remains worrisome.
AIAIMT has received around 16-17% returns from Thai stocks and 11% returns from foreign stocks this year, said Mr Sukkawat.
However, despite many supporting factors, the global economy must still face several risk factors that may undermine the recovery, including the potential re-emergence of the pandemic from a new variant of the virus, geopolitical risks, and uncertainty pertaining to the major economies' directions for their economic stimulus measures.
Mr Sukkawat said that the Office of Insurance Commission has allowed insurance companies to raise the ceiling for foreign investments from 15% to 30% last year.
However, at present the company still invests only 14% in foreign markets. Most of them are debt securities with an average yield of about 5%.
According to Pira Panitpon, director of unit-linked business at AIA Thailand, Unit Linked Insurance Policy (ULIP), a type of high-growth insurance policy which grants a buyer both insurance protection and an opportunity to gain from investments, will play a crucial role in supporting AIAIMT's future growth.
He said businesses in all industries have been heavily impacted by the pandemic, including the life insurance industry. According to a report from the Thai Life Assurance Association, the life insurance industry's first-year premiums in the first half of 2021 declined 5% from the same period last year.
However, ULIPs have defied the current trend and continue to grow by 137% from the same period last year.
Mr Pira said ULIPs attract buyers with great coverage, low premiums, and flexible and customisable premium payment periods.
Having sold a total of 190,000 policies of unit-linked insurance as of June 30 this year, AIA Thailand has ranked first in the industry in terms of ULIP sales for more than six consecutive years and developed many types of unit-linked insurance policies with a focus on long-term investments.
Mr Sukkawat said AIA Thailand's private fund is heavily weighted in investments in low-risk assets. Approximately 90% of the investment is in fixed-income, of which 14% are investments in foreign debt instruments, and 10% are investments in Thai stocks.
A total of 59% of investment premiums received from the unit-linked products worth 34 billion baht are invested in the Thai stock market, while 27% are in Thai bonds and the rest is in foreign stocks.
However, unit holders can choose to invest more in high-risk assets and adjust their investments to better suit their appetite, ranging from low-, medium-, to high-risk investments.
AIA Thailand's unit-linked life insurance has recorded an average of 17% growth over the past six years, 26% growth over the past two years, and 137% growth in the first six months of this year.
"Unit-linked insurance is a product that we have had since 2009, but is still very popular nowadays thanks to its high returns of 5-7% that is satisfactory for investors and relatively much higher than the deposit interest rate that has remained low for a long time. We expect the product will continue to grow for the next several years," Mr Sukkawat said.
