SEC allows funds to invest in infrastructure funds as alternative investment

Bangkok, March 25, 2013 – The SEC will allow mutual funds, private funds, and provident funds to invest in investment units of infrastructure funds so as to increase their investment alternatives and allow them to diversify investment risks.

 

SEC Secretary-General Vorapol Socatiyanurak said that “In general, infrastructure funds investing in infrastructure projects will obtain their revenue from such business operating results. It could be considered as another important investment alternative for mutual funds, private funds, and provident funds for investment diversification.

In addition, as infrastructure funds generate returns that reflect the changing inflation rate, it could therefore help prevent inflation risk.”

 

To allow the funds to invest in infrastructure funds as another investment alternative, the SEC will revise the regulations to determine investment proportion in infrastructure fund’s investment units in line with risk diversification criteria applicable to other assets as follows:

• A fund can invest in an infrastructure fund listed on the stock exchange not exceeding 15 percent of its net asset value (NAV); and not exceeding 25 percent of NAV for a fund offering investment units for sale to non-retail investors, or a mutual fund or a private fund for retail investors with investment diversification below the standards (specific fund);
• For non-listed infrastructure fund, a fund’s investment must not exceed five percent of NAV;
• Provident fund can invest in infrastructure funds, but when combining with other investment alternatives must not exceed 15 percent of NAV.

 

Infrastructure fund can also be categorized by industrial sector in which  it invests, for example, if invested in transportation system project, infrastructure fund will be listed under transportation and logistics sector. Furthermore, infrastructure fund investing in multiple infrastructure funds in the proportion exceeding 80 percent of NAV in average per fiscal year can be categorized as special fund or “Fund of Infrastructure Funds”. In this regard, calculation of investment ratio in infrastructure fund will exclude investment proportion in equity and debt instruments due to the difference of its risk and return characteristics.