ETF

ETF Product Specification

Exchange traded fund (ETF) is a listed fund that seeks to replicate the return of a benchmark index or asset(s). They can be traded on a stock exchange in the same way that stocks are.
ETF  is a financial instrument that combines
the best features and benefits of mutual funds and stocks.

Why ETF?

ETFs offer greater diversification, do not require large investment, and eliminate the need to analyze individual stock. Returns tend to mirror underlying index and possible dividend yield.

Moreover, ETF has market maker(s) who provide liquidity by placing bid and offer. Investors may trade ETF by comparing the market price to real-time Indicative Net Asset Value (iNAV).

How many types of ETFs are there?
The SEC allows ETFs to replicate the performance of the following indices and assets:
  • SEC-recognized securities indices
  • SEC-approved securities or other financial instruments
  • Foreign ETF
  • Gold bullion recognized by Thai or international gold trading industry
How many types of ETFs are there?
The SEC allows ETFs to replicate the performance of the following indices and assets:
  • SEC-recognized securities indices
  • SEC-approved securities or other financial instruments
  • Foreign ETF
  • Gold bullion recognized by Thai or international gold trading industry

The following ETFs are listed on the Thai Stock Exchange:

etf1

Equity ETFs / Index ETFs
that seek to replicate the performance of domestic stock indices.

etf2

Sector ETF
that seek to replicate the performance of industry indices.

icn_etf3

Foreign ETF
that seek to replicate the performance of foreign equity indices.

etf4

Bond ETF
that seek to replicate the performance of bond price indices.

etf5

Gold ETF
that seek to replicate the gold price.

How are ETFs different from stocks and Index Funds?

 ETFStocksIndex Funds
Yield (Investment Purpose)  Tracks underlying indexTracks single stockTracks underlying index
Trading on the stock marketYes YesYes
PriceReal-Time Real-TimeEnd-of-day
Minimum order (Board lot)100 units100 sharesNo minimum unit.
But minimum investment applies i.e. THB 1,000
Trading TimeSET trading hoursSET trading hoursSpecified by asset management companies
Transaction FeeBrokerage FeeBrokerage FeeManagement fees by asset management companies
Trading MethodVia brokersVia brokersVia asset management companies
Settlement TimeT+2T+2T+4
ReturnCapital Gains / DividendsCapital Gains / DividendsCapital Gains / Dividends
Capital Gain TaxExemptedExemptedExempted
Dividend Tax10% withholding tax10% withholding tax
(qualified for a tax credit)		10% withholding tax

FAQ 

An ETF is a passive fund provided by an asset management firm to generate returns that are consistent with the fund's underlying index and the investment objectives stated in the prospectus.  Investors may review the prospectus on the fund's investment policy, performance, and securities holding at any time.
ETF trading prices are the bids and offers that appear on the trading screen. It is determined by demand and supply in the market. In general, ETF trading price should be consistent with the fund's NAV, which is calculated from the closing price of stocks or underlying asset end of day. ETF issuers will publish the iNAV every 15-30 seconds throughout the exchange trading hours for reference to help investors make an informed decision.
ETFs are traded in board lots, with a minimum lot size of 100 units.
There are two types of returns:
  • Capital gains when investors sell their ETF shares at a higher price than when they were bought
  • ETFs that invests in equities may receive dividend when fund manager distributes
ETFs, similar to other investments, carry risks as follow
  • Market risk from declining value of the ETF's asset holding, which affects the ETF's NAV
  • Tracking error risk, or the difference between an ETF's and its underlying assets' returns, may significant impact an investor's returns.
  • ETF price fluctuation risk as a result of market demand and supply
  • Liquidity risk caused by market demand and supply
  • Currency risk if the ETF invests in foreign assets
Securities companies will charge commission fees associated with the purchase or sale of the ETF, plus a 7% VAT of the fees.

 

Dividends 

Capital gains 

Individual investor 

 10% withholding tax  Exempted 
Juristic investor Listed companies are eligible for tax-exempt Corporate income tax  
Asset management company, as an issuer, will appoint market maker(s) to place bid and offer to ensure continuous quotes throughout exchange trading hours.    
Asset management company, as an issuer, will trade ETF units (Creation/Redemption Units) directly with participant dealers. Investors who want asset management companies to create more ETF units or sell back their ETF shares must contact the participant dealers.

How can I find out more about ETFs ?

bullet Check
Learn more about an ETF from its prospectus
bullet Check
Review the ETF's fund fact sheets
bullet Check
Get more info from the websites of SEC, SET, and the ETF  issuer