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How to invest in Thailand SET index funds in 2023
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10/1077% of retail CFD accounts lose money.
It only takes a few minutes to invest in the Thailand SET index. One of the simplest and most popular ways to invest is to buy shares in a Vanguard Thailand SET ETF through an online trading platform.
Where can I invest in the Thailand SET index?
According to our expert research, eToro is the best ETF broker to invest in Thailand SET index funds.
Both Thailand SET ETFs and Thailand SET CFDs are available to invest in through eToro .
Here are three more places to buy the Thailand SET, ranked according to their cost, security, and features.
77% of retail CFD accounts lose money.
How do I invest in the SETI index?
The easiest way is to sign up to a stock broker, open an investment account, and buy shares in a Thailand SET ETF or CFD. This guide explains how to do it:
Step 1. Sign up to eToro
We recommend using eToro to invest in Thailand SET. Sign up for a brokerage account and deposit some money. You may need to supply a form of photo ID to verify the account.
77% of retail CFD accounts lose money.
Step 2. Decide how to buy Thailand SET
This boils down to choosing between an Thailand SET ETF or CFD. ETFs are generally better suited to investors who want to passively track the Thailand SET’s performance. CFDs offer a greater range of trading options: you can use leverage, short the index, or buy and sell it outside of trading hours.
Step 3. Invest in the Thailand SET
Sign into your trading account and search for the Thailand SET. Hit the ‘buy’ button and enter the details of your purchase, such as how much you want to spend. Hit ‘buy’ again to execute the trade.
Step 4. Monitor your investment
When you buy a CFD, the trade goes through more or less instantly, and you’ll be able to see your new open position in your trading account. ETF purchases can take longer, and if you buy outside of traditional trading hours it won’t go through until the next morning.
Your trading account will show the price change in the Thailand SET since you bought it, so you can see your profit/loss at a glance. Use that information, along with your own research, to decide when to sell the Thailand SET and close your position, ideally at a profit!
The different ways to invest in the SETI
As we mentioned above, there are numerous ways to put your money into the Thailand SET. ETFs and CFDs are the simplest options for beginners, but there are alternatives. Here’s a brief overview of each option and who it’s best suited for.
Thailand SET ETFs
An ETF (exchange-traded fund) is an investment fund traded on a stock exchange, much like a stock. Exchange traded funds can hold different assets, such as individual stocks, bonds, or commodities, or serve as a proxy for a stock market index.
An Thailand SET ETF is one way of investing in the Thailand SET. It’s simply an investment fund that mirrors the performance of the Thailand SET. When you buy shares in the fund, the value of your investment will rise or fall with the Thailand SET itself.
ETFs are ideal for new investors because they have a very low minimum investment. You can start with a few pounds and get exposure to some of the world’s largest companies. They’re also practical if you plan on trading the Thailand SET index, because you can buy or sell shares in the fund throughout the day.
Examples of popular SETI ETFs
- iShares MSCI Thailand ETF (THD)
- Krungsri SET50 ETF (SET50)
- CIMB-Principal SET50 ETF (SET50)
Thailand SET index funds
An index or mutual fund is an investment fund that aims to track the performance of a stock market index, such as the Thailand SET. It’s very similar to an ETF, in that there are low management fees and you can buy shares through your online broker.
However, there are a couple of differences. Thailand SET index funds are only priced at the end of each trading day, so you can buy or sell shares in the fund once per day. There may also be a higher barrier to entry, through a much larger minimum investment when you invest in Thailand SET index funds.
That means an Thailand SET mutual fund is better suited for long term investors with a higher initial budget, where the infrequent trading and barriers to entry are far less of an issue.
Examples of popular SETI index funds/mutual funds
- TMB Asset Management SET50 Index Fund (TMBSET50)
- SCB Asset Management SET50 Index Fund (SCBSET50)
- Kasikorn Asset Management SET50 Index Fund (KFCSET50)
Thailand SET CFDs
CFDs (contracts for difference) are a way to speculate on Thailand SET price changes with more flexibility than if you use an ETF or index fund. A CFD is a ‘derivative’, which means it gets its value from the underlying asset – in this case the Thailand SET – but it’s separate from it.
As a result, CFDs can be leveraged, where you borrow money to multiply the size of the trade, or they can be used to go ‘short’, where you place a trade on the index to fall in value. You can also buy and sell them outside of regular trading hours.
All of this means Thailand SET CFDs offer the potential to outperform a fund that passively tracks the Thailand SET’s performance. Of course, you can also underperform it as well. Tools like leverage and shorting introduce a lot more risk, and are best left to experienced traders.
Thailand SET futures
Futures contracts are agreements to buy or sell the SETI at an agreed price on a set date in the future. Thailand SET futures are a means to predict how you think the index is going to perform over a set time frame, such as the next three or six months.
Most futures contracts involve leverage, so you only put up a small part of the total trade value (the margin) when you buy one. That makes futures more risky, and they require a bit more financial expertise to understand as well.
Some traders use futures as a hedge against the performance of stocks they own. For instance, if you own stocks that are part of the Thailand SET then you might want to short the Thailand SET so that you still make some money if the price falls.
Thailand SET stocks
Another way to invest in the Thailand SET is to buy shares in the individual stocks that the index tracks. It isn’t practical to buy every share in the index, but you can invest directly into a few of the most heavily weighted stocks in the Thailand SET in order to get broad exposure to its performance.
The most heavily weighted stocks in the Thailand SET tend to be the largest companies by market capitalisation. If you invest directly in those largest stocks, you gain exposure to the index without taking on the risk of all the underlying companies.
One reason to do this is that these larger companies with the highest market cap dominate the index anyway, so that it can give you the impression of a diversified portfolio while actually being reliant on the performance of those particular stocks.
For the Thailand SET index, the largest stocks you might choose to invest in are:
| Company | Index weight |
|---|---|
| PTT Public Company Limited (PTT) | 9.76% |
| Advanced Info Service Public Company Limited (ADVANC) | 9.11% |
| Siam Commercial Bank Public Company Limited (SCB) | 8.81% |
| Siam Cement Public Company Limited (SCC) | 8.49% |
| Kasikornbank Public Company Limited (KBANK) | 8.23% |
| CP All Public Company Limited (CPALL) | 6.51% |
| Bangkok Bank Public Company Limited (BBL) | 4.91% |
| Charoen Pokphand Foods Public Company Limited (CPF) | 3.75% |
| Krung Thai Bank Public Company Limited (KTB) | 3.72% |
| PTT Exploration and Production Public Company Limited (PTTEP) | 3.31% |
The flip side of investing directly like this is that you lose the diversification and stability that comes with buying into an entire index. It requires much more hands-on management to do your own stock picking, so it’s best suited to more experienced investors.
How much does it cost to invest in the Thailand SET index?
From $0 to $5, depending on how you invest. For each option, you must consider the cost of buying the actual asset, whether that’s an ETF, index fund, CFD, or share, plus the fees associated with it.
| Instrument | Trading fee | Management fee |
|---|---|---|
| Exchange traded funds | $0-$5.99 | 0-0.2% |
| Index fund / mutual fund | $0-$5.99 | 0.1-2% |
| Individual stock | $0-$3 | None |
| CFD | $0 | None |
*A fee comparison of 3 leading brokers for example purposes
ETFs and CFDs are generally the cheapest option overall, as they have low fees and a low minimum investment. Index funds and mutual funds have low fees but may have a high minimum investment. Buying individual stocks is the most expensive option in absolute terms, because the share price of a single large company is often more than $100.
All options are likely to include a trading fee, which you pay each time you make a transaction. Some trading platforms offer zero-fee trading, with others it may be a few dollars.
Then ETFs and index funds each have their own expense ratio. Expense ratios refer to an annual management fee, charged as a percentage of your total investment. Expense ratios are usually no more than 0.05%, so if you invest $1,000, you would pay $5 per year in management fees.
Should I invest in the Thailand SET index?
Yes, Thailand SET investing is a great choice if you’re looking for a safer investment with more price stability compared to picking individual stocks. It gives you an instantly diverse portfolio with exposure to a broad area of the stock market.
The flip side is that you have less control over which companies you invest in. An index committee decides how the index works, and you can’t pick and choose the underlying companies you like the most. The Thailand SET is better suited to hands-off investors, compared to those who have the skills, experience, and desire to pick their own stocks.
What are the advantages of investing in the Thailand SET index?
An index provides instant stock market diversification, where you spread your risk across a large number of underlying companies, rather than one or two. Here are some more reasons why you might want to invest in the Thailand SET index:
- Thailand has high growth potential. The Thai economy has been rapidly growing in recent years. Its government has focused on developing infrastructure and attracting foreign investment, which may positively impact the index.
- Government policies are favourable for foreign investors. In recent times, the Thai government has made changes to its policies that are aimed at promoting foreign investment. Some of these include tax incentives for foreign investors.
- The Thailand SET index is diverse. The SETI includes a diverse range of stocks from various sectors, such s finance, energy, and consumer goods. This diversification helps limit any sector-specific impacts when investing.
- Thailand is strategically located with future growth potential. Thailand’s location makes it a key player in the Southeast Asian region. It has access to growing markets from neighbouring countries.
What are the disadvantages of investing in the Thailand SET index?
The main risk of investing in the Thailand SET is that all the underlying companies are related in some way, so a broader economic downturn that affected the entire country would likely affect many stocks in the index at the same time. Here are some more risks of Thailand SET investing.
- Political instability may impact SETI’s performance. Thailand has historically been known for political instability and military coups. If its political landscape does not improve, it may lead to uncertainty for investors.
- There is currency risk. The Thai Bhat is volatile against other currencies. As the index is priced in Bhat, currency fluctuations could impact the returns for investors.
- The Thai economy is often affected by natural disasters. Thailand is prone to natural disasters such as floods. In the past, natural disasters have proven detrimental to the economy.
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