Infrastructure and REIT Funds: A Haven for Investors Amidst Market Jitters

Attractive yields and defensive qualities make these assets a preferred choice as the Thai stock market faces headwinds and interest rates decline

 


As the Thai stock market navigates a period of significant pressure, Real Estate Investment Trusts (REITs) and Infrastructure Funds are emerging as sought-after safe-haven assets, offering robust returns of 5-10%.

 

Amidst the ongoing challenges in the Thai equities market, both REITs and Infrastructure Funds are demonstrating remarkable resilience.

 

Investor capital is consistently flowing into these funds, driven by lingering uncertainties from the trade war and a clear trend of falling interest rates.

 

Financial experts are unanimous in their view: these funds represent secure investments delivering high yields.

 

Win Phromphaet, CFA, CEO of Kasikorn Asset Management Co., Ltd., highlighted to Krungthep Turakij that the surging popularity of Infrastructure Funds and REITs is directly linked to the prevailing downward trend in interest rates.

 

These funds are providing returns that significantly outshine other asset classes, boasting average dividend yields of an impressive 6-10%. This figure is particularly striking when compared to current government bond yields, which sit below 2%.

 

It's undeniable that the Thai stock market has experienced a substantial correction recently.

 

However, Infrastructure Funds and REITs have shown greater stability, experiencing much shallower declines and weathering the storm considerably better.

 

This makes them an ideal solution for investors searching for a "safe harbour" that continues to deliver strong returns even when the broader Thai stock market is volatile.

 

 

Despite its recent downturn, the Thai stock market retains a distinct allure through its dividend payouts, a characteristic shared with Singapore, where high dividends are common despite a smaller asset base.

 

Consequently, for investors prioritising consistent income, these funds prove to be an excellent fit.

 

Moreover, should trade tensions escalate, investment capital could well shift from the United States into Emerging Markets.

 

Thailand is well-positioned to leverage the strength of its dividend-paying equities, particularly REITs and Infrastructure Funds, as a compelling draw for foreign investors.

 

Now presents a opportune moment for investors to progressively increase their allocation to REITs and Infrastructure Funds, aiming for at least 5% of their portfolios, given their appeal as alternative investments.

 

Chayanon Rakkanjanan, CEO and Co-founder of Finnomena (Investment Advisory Brokerage Co., Ltd.), added that Infrastructure Funds and REITs are once again generating interest. Previously, their performance often lagged, making them less attractive.

 

This suggests that much of the negative news has already been factored into their pricing.

 

As economic headwinds gather, the Monetary Policy Committee (MPC) is likely to implement interest rate cuts in the latter half of the year.

 

This would consequently diminish the returns on debt instruments. In contrast, the attractive yields offered by Infrastructure Funds are creating an increasingly wide spread, currently at its highest in two to three years.

 

Returns on these funds have also become more appealing, averaging approximately 4-6%, which is considered a healthy payout.

  


"The anticipated decline in bond yields and interest rates is expected to prompt a shift of capital from fixed income into Thai Property Funds and Infrastructure Funds. Over the past fortnight, global Infrastructure Funds have universally experienced inflows. This moment signifies a significant global trend for the latter half of the year, as investors, still wary of uncertainties surrounding Trump's tax policies, are increasingly gravitating towards defensive assets, a benefit Thailand is also enjoying."


 

Nonetheless, it's advisable for investors to gradually accumulate these assets due to their appealing defensive nature.

 

If the downside for Thai equities is perceived to be below 1,000 points or close to the COVID-19 period, without strong growth drivers, then investing in a defensive play like an Infrastructure Fund becomes highly attractive.

 

Thai funds, in particular, are compelling given their capacity to deliver higher returns than their international counterparts, where the global average stands at 2-3%, while some Thai Infrastructure Funds can offer average returns as high as 5%.

 

Bodin Buddhain, Director of Investment Strategy at Eastspring Asset Management (Thailand) Co., Ltd., further elaborated that while Thai Property Funds and REITs have remained in negative territory compared to global equity markets recently, their year-to-date performance in 2025 has been less negative than the broader Thai stock market.

 

REITs are down by around 7%, whereas Thai equities have seen a sharper decline of over 14%, providing another clear reason for their outperformance.

 

Furthermore, the dividend yield from these funds hovers around 9.9%-10%, significantly higher than the overall Thai stock market's estimated dividend yield of merely 4-4.5%.

 

This stark difference indicates that the expected dividends from Property Funds and REITs are almost double those of Thai equities.

 


"While Property Funds and REITs carry higher risks than traditional stocks due to a more concentrated asset base, in a climate where the Thai stock market is grappling with domestic economic and political uncertainties, alongside external factors like the trade war, Property Funds and REITs have exhibited less volatility and delivered superior returns. Crucially, the consistent and relatively stable cash flow from rental income remains a significant strength during periods of economic fluctuation."


 

Returns from these funds have seen an uptick since the second quarter of April 2025, specifically from around April 9th, and have continued to rise.

 

This sustained increase is driven by heightened uncertainty following the announcement of US tax policies, prompting investors to seek more predictable investments. However, while Global Infrastructure Funds have gained 14-15%, their Thai equivalents are still in negative territory.

(2025/06/30-00:00)