Krung Thai Asset Management Public Company Limited (KTAM) is an investment management company, which offers mutual funds, securities, investment strategies, financial planning, and advisory services. In an exclusive interview to the International Finance, the CEO of KTAM, Chavinda Hanratanakool, talks about the company, its clients and the challenges ahead.
1. Can you tell us about your company?
We are a locally based asset management company. Our business is to invest on behalf of our clients, from large institutions to high-net-worth individuals to retail investors. However, our products are not limited to investment services. We also have other services such as property and infrastructure funds, trustee for REITS, private equity trust, and provident fund registration. Currently, we are the fourth largest asset management company in Thailand with asset worth USD 27.5 billion at the end of 2021.
2. How long the company has existed and where are your offices based?
We started off in 1996 and have an office in Bangkok and Thailand. The company, formerly known as Mahanakorn Asset Management Co. Ltd., was established on October 7, 1996 with a paid-up capital of 100 million Baht. It received an asset management license by the Finance Ministry on November 15, 1996. The company was renamed Krung Thai Asset Management Company on August 4, 1999, popularly known as KTAM among clients, business partners, and general public.
On December 23, 1999, our paid up capital reached 200 million Baht to galvanize our competitive position and stature among the business community and clients. The company was awarded a private fund management license on December 26, 2000. In 2002, the company became a public limited company and was renamed as Krung Thai Asset Management Public Company Limited. The SEC awarded the company with a license to invest in derivatives on July 18, 2006.
3. What are the areas in which your company specializes?
Our strength lies in the business of equity. KTAM has a competitive edge investing in local mid and small cap stocks. Small-cap stocks have demonstrated greater growth than their large-cap counterparts if remained invested for a long time. Intuitively this makes sense as smaller companies have more room to grow and can be nimbler in response to growth opportunities. One of the challenges of investing in small and micro-cap companies has always been access to information. What makes our competitive edge even stronger is our research team and analyst that has strong commitment to an uncovered area. Our team conducts significant due diligence in an effort to maintain the highest quality small cap universe.
The strength lies in the business of property, infrastructure funds and REITs. Our track record speaks for itself, naming a few of our landmark deals are Tesco Lotus Retail Growth Freehold and Leasehold Property Fund (TLGF), Thailand’s largest property fund at the time of launch and Thailand’s first infrastructure fund sponsored by the government, the Electricity Generating Authority of Thailand’s North Bangkok Power Plant Block 1 Infrastructure Fund (EGATIF).
Thailand Future Fund (TFFIF) objective is to raise funds from the public and general investors and utilize the proceeds to invest in infrastructure businesses. TFFIF has opened up opportunities for the general public to take part in investment in quality transport infrastructure development of the government and state enterprise to foster the country’s competitiveness.
Another strength is our knowledge of the local market where we believe that our understanding and in-depth research will give us an advantage over our competitors. At the same time, we have created a local niche offering for our clients with a comprehensive range of products across various asset classes and investment strategies.
4. What are your thoughts on different funds available in the market for the last few years?
In the last few years, foreign investment funds (FIFs) have boomed due to the local market and the attractive returns elsewhere. However, the momentum has slowed down as all major markets have struggled recently. We are still seeing more innovative products than ever being launched, and especially products that will protect clients from high volatility. Since the pandemic, more people have started investing and we believe this growth will be reflected in mutual funds too.
KTAM is the asset management arm of a state-backed bank, so it is often regarded as a traditional asset manager. Yet, it still manages to leverage fintech and social media to grow the business and engage investors, particularly during Covid-19.
5. What are the key challenges involved in the transformation from a traditional asset manager to a tech-savvy one? How has KTAM overcome them?
Over the last 5 years we have seen our retail client base migrating to mobile banking. Due to our mother company’s synergies with government projects, we have witnessed major spill over effects into our digital product offerings and services as retail investors are not familiar with the various mobile applications.
More technical support was provided to our clients who had not used our online services. The firm believes that through knowledge sharing and spill overs from various partners, greater efficiencies can be achieved, enabling the firm to rely less on external managers.
6. What infrastructure or platform have been built to adopt fintech?
Compared to our peers in the industry, Krung Thai Asset Management currently uses the highest number of technologies and technological platforms to assist in various areas of the business.
Our KTAM Smart Trade application is available on all major mobile platforms and web browsers, which allow our clients to easily execute transactions across all funds. This platform helps investors in tracking their performance and other fund’s performance.
We have partnered with Fintech firms, Private Banks, Brokerage firms, and Finance Brokers across the country to expand distribution of our products. For example, KTAM has entered into a joint development partnership with Technology start-ups’ (non-manager) to help with the investment formulation plans of our thematic products. KTAM have used artificial intelligence to select stocks in the mutual fund Krung Thai AI Brain Fund. Securities are screened from various financial ratios and metrics that directly correlate with stock price, such as profitability ratio, liquidity ratio and efficiency ratio in operations. The system will create an investment portfolio from selected securities by finding the right balance point for weighting in each investment. Artificial Intelligence is a huge theme that our organization is currently utilizing.
We have few pending projects that will employ a lot of interesting technologies. We will be revamping our mobile application to enable easier account openings via facial recognition. So, in the future, you can open a mutual fund account without having to visit the bank or provide hardcopies. Recently, we have seen heavier traffic on order system online where clients can subscribe or redeem their shares via our website and mobile application. More technical support was provided to our clients who previously had not used our online services.
We are also working on Robot-advisory. This will be a tool used by our clients to readjust their portfolios with the help of Artificial Intelligence and Big data. These projects should be up and running by next year.
We also use various security technologies within our IT infrastructure to ensure all our information and client’s information is kept safe. It is important to make sure we protect ourselves with many layers of security, so we do not get hacked by people looking to exploit our data.
7. Can you outline your role as a fund manager and how you approach your clients?
As a fund manager, our role is to deliver consistent returns and remain true to our philosophy and style. Our approach is simple — we aim to become clients’ long term investment partner. We do this by understanding their needs and limitations, delivering best possible solutions, ensuring highest quality of services with full transparency.