Bangkok, 4 January 2022 – The Securities and Exchange Commission (SEC) has revised the rules related to investment in mutual funds under management of the same asset management company to enhance flexibility for efficient investment management and to ensure consistency with the Regulatory Guillotine* guidelines without compromising appropriate investment protection.
Currently, asset
management companies have established mixed funds with more diversified asset
allocation to meet different demands of investors and to enhance efficiency for
managing investment in each type of assets. In this regard, asset management
companies may choose to invest in mutual funds that concentrate on a specific
type of assets and require specific expertise of fund managers to ensure economy
of scale for such investment management. In addition, asset management
companies view that the existing rules that allow management of mutual funds
through investment in other mutual funds under management of the same asset
management company only up to two tiers for general mutual funds may not be flexible
enough.
The SEC has therefore revised the governing
rules in this matter to allow mutual funds to invest in other mutual funds
under management of the same asset management company up to three tiers** to
increase flexibility for asset management companies to manage asset allocation
more efficiently. This would support the development of investment types or
strategies that are more versatile in response to investor demands while
maintaining preventive measures on conflicts of interest. The revised rules
also protect the best interest of investors by prohibiting collection of
redundant fees, prohibiting the exercise of the voting right of the invested
funds, providing correct and complete information for investment decision
making, and disclosing information in the fund scheme and prospectus.
The revision of the investment rules has undergone
public consultation the results of which showed that most respondents agreed
with the guidelines proposed by the SEC. The revised rules have come into force
since 1 January 2022.
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Remarks:
* Regulatory Guillotine is the regulatory
review of the existing laws and regulations. The reviewed laws and regulations
that are not necessary or do not keep pace with situations or remain obstacles
to living or occupations will be abolished or revised to lessen burden on
people. By doing so, methods used must be done with speed, transparency, low
costs with participation of all related parties.
** Mutual funds are allowed to invest in
mutual funds under management of the same asset management company in three
tiers at the most. For example, Mutual Fund A invests in Mutual Fund B and
Mutual Fund B invests in Mutual Fund C, etc.