The purpose of setting up an investment policy is to lay a boundary on investment a fund manager is or is not permitted to invest. A fund committee; thus, has to identify the investment policy with an investment management company in a written statement so that the fund manager can use as a guideline when managing a fund. Normally, the investment policy would specify types of assets and proportion of investment in each type of assets in which the fund manager has to follow. The fund committee, who has a vital responsibility in overseeing the fund performance as well as in protecting members’ best interest, should opt for a policy within an acceptable risk level that will meet members’ expected return.
Generally, investment policies could be classified into non-specialized funds and specialised funds as follows:
1. Equity fund
This policy focuses on investing in equity assets. At least 65% of the net asset value (NAV) has to be invested in the equity assets.
2. Fixed income fund
This policy focuses on investing in the secured assets in order to get permanent benefits in form of interest. The investment assets are deposits and fixed income assets such as government bonds, treasury bills, certificate of deposits, promissory notes, bill of exchange, debentures.
3. Mixed fund
The investment assets would cover deposits, fixed income assets and equity assets.
3.1 Mixed: limit fund
It specifies the limitation of equity assets such as 10%, 20%, or 40% of the NAV. However, the equity assets must not exceed 65% of the NAV; otherwise, it will be classified as equity fund.
3.2 Mixed: flexible fund
The investment is managed upon the discretion of the fund manager.
4. Specialised fund
The investment does not focus on either equity assets or fixed income assets. It has an exclusive investment form such as index funds, fund of funds, guaranteed funds, foreign investment funds, or specific funds.
However, since each member may have different preferences toward investment choices, in order to allow investment management companies (IMCs) to have sufficient information to know their customers; hence, are able to establish investment strategies that suit to the needs and characteristics of fund members, the Securities and Exchange Commission of Thailand and the Association of Investment Management Companies (AIMC) have called for all IMCs to gather information and set up customer’s profile according to AIMC’s notification so that the IMCs can effectively sort out suitable investment policies to recommend the fund committee. Owing to this, the fund committee should cooperate with the IMCs in collecting information for the best interest of the funds and their members