Best Fund House - Domestic Fixed Income

The winner of Morningstar Awards 2023 Best Fund House - Domestic Fixed Income is Kiatnakin Phatra Asset Management Company Limited

Morningstar 22/03/2566
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Let’s get to know more about Kiatnakin Phatra Asset Management through our short interview.

Could you share with us about which factor(s) do you think that contribute to your firm achievement as Best Domestic Fixed Income House?

At the core of our success is our commitment to the right philosophy, process, and people.

Philosophy: Our investment philosophy is rooted in the principles of value investing, prioritizing consistency in the long-term over short-term performance. Rather than chasing immediate gains, we seek to build sustainable and resilient portfolios that can weather market volatility and economic uncertainties. We adopt a disciplined and patient approach, where we continuously monitor and adjust our portfolios to ensure alignment with our investment objectives. We believe that by remaining focused on the long term and avoiding the common pitfall of getting caught up in market noise, we can deliver superior risk-adjusted returns in the long run.

Process: Our investment process is fundamentally-driven, aiming to establish well-defined investment goals and constructing portfolios accordingly based on varying risk budgets. To make informed investment decisions, we employ a consistent and data-driven decision-making process that relies on both quantitative and qualitative inputs primarily from our in-house analysts and fund managers. We utilize various analytical tools to identify mispriced opportunities to generate alpha. At the same time, we recognize the importance of process improvement, and we continuously monitor our investment decisions to identify any shortcomings. Overall, our investment process is designed to deliver consistent and superior risk-adjusted returns while minimizing downside risk. 

People: It is vital that we have the right people on our team, as we recognize that our success is driven by the expertise and dedication of our team members. Working together, fund managers, in-house investment analysts, and dealers form a cohesive team that is focused on delivering the best portfolio implementation. Our risk managers and compliance officers are responsible for monitoring and controlling risk across all the funds, in compliance with all applicable rules and regulations. Our business development team ensures that the clients’ demands are met in the best possible way. Finally, our operations team is tasked with handling trades and conducting smooth operations. With everyone working towards a common goal, we can deliver best-in-class investment solutions for our clients.

What do you think sets your firm apart from a cultural standpoint?

Our company’s principles can be elaborated as follows.

‘Winning Attitude’ & ‘Grit’: Everyone contributes to the company's success by going above and beyond. Our colleagues have a mindset to take on new challenges and strive for excellence. When faced with setbacks and difficulties, we have the resilience to stay committed to the long-term goal. By combining a winning attitude with grit, we can harness our inner strength to overcome obstacles, push through tough times, and achieve the desired outcomes.

‘Community’: Our company has a flat hierarchy that enables even the newest members to express their ideas to the CEO directly. At KKPAM, we appreciate all perspectives and evaluate them on their merits. Everyone is encouraged to share information, insights, and perspectives liberally. This fosters a collaborative environment where colleagues can challenge each other's assumptions and evaluate investment opportunities thoroughly.

‘Market’: We prioritize understanding our clients' demands and excelling in a competitive market to produce the best outcomes. In a free market, businesses must compete to attract and retain clients, which leads to improvement in quality, value, and customer service. Our client-oriented approach involves putting the client first, striving to understand their needs and preferences, tailoring products to meet those needs, and ultimately delivering value to our clients. 

Could you share with us about your strategy during the increasing bond yield in 2022?

With regards to our money market and short-term bond funds, they tend to perform relatively well under rising interest rate environment. Higher bond yields generally help improve the funds’ performance, as we could reinvest at a higher rate. Our medium-term funds had some drawdown during the historic market selloff, but we mitigated the downside with the positioning of the funds. We provided the details on how we approached our medium-term bond funds in another Q&A for KKP ACT FIXED, the Mid/Long Term Bond award winner.

What is your view on interest rate and economic recession? How would that impact your funds’ strategy?

We believe that Thailand is unlikely to experience a recession in 2023, as the economic recovery is well-supported by China’s re-opening. The tourism industry will be the main driver for this year’s growth, while lower exports due to a global economic slowdown, particularly in developed countries, may have a negative impact on growth. With regards to inflation, although the headline number is showing signs of slowing down from stabilizing commodity prices and easing supply chain disruptions, there could be upward pressure on core inflation from the service sector.

As a result, we anticipate that the central bank will continue its policy rate normalization and implement targeted support measures as needed. At current market pricing, interest rates are expected to remain low for the foreseeable future. Therefore, we remain cautious, and our investment strategy will involve a focus on shorter-duration fixed-income securities to mitigate interest rate risk while maintaining the flexibility to adapt to changing economic and market conditions.

How would you recommend investors to invest in Thai fixed income funds this year?

We believe the recommendations below are always applicable and not specific for just this year.

  • Make sure you understand the fund’s investment objectives and risk profile before investing. The fund’s objectives should align with your financial goals, and you should be comfortable with the level of risk involved.
  • Invest according to your own time horizon. For example, if you plan to invest only for a short time, it is better to stay in low-risk assets, e.g., money market funds, as they have low volatility and can provide immediate liquidity. On the other hand, if you have a longer horizon, you might be able to take on additional risk in pursuit of higher return and invest in long-duration funds.
  • Dollar-cost averaging (DCA) can help manage cost volatility and maintain investment discipline. By spreading out the investment over time, your cost will not be concentrated at a single point in time. DCA also helps you avoid the temptation to time the market, which is very difficult and often results in poor performance.
  • Do not invest based solely on past performance. When selecting a fund house, consider the fund manager's philosophy, process, and people, which are the most critical factors. Performance merely validates the robustness of those three factors. 

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