Thailand's Government Pension Fund (GPF) is boosting its foreign exposure to 40% of total assets next month, and will review its long-term asset allocation plan next year as it seeks to raise investment returns, Secretary General Srikanya Yathip says in an interview with the Bangkok Post.
Tourism-dependent Thailand has been one of the worst hit in Southeast Asia as the coronavirus pandemic forced many nations to shut their borders to curb the spread of the virus. The government expects the Thai economy to shrink 8.5% this year.
Factors such as government stimulus, central bank liquidity injections and technological disruptions “are poised to bring lower investment returns in the future if funds do not formulate good investment plans”, Dr. Srikanya says in the interview published on September 27.
The GPF’s foreign investment limit will be raised to 40% starting October 1, from the 30% threshold in its current strategic asset allocation. It now holds 28.5% in global assets.
"Once the ceiling for overseas investment is increased to 40% next month, the fund will invest in stocks in developed markets, especially new tech businesses and other potential growth stocks," Dr. Srikanya says.
She says the fund cut exposure to low-risk assets to 61.7% as of July 31 from 65.8% four months earlier, and will raise allocation to high investment-grade foreign bonds to hedge against uncertainties and inflation.
She says the GPF allocates 60% to low-risk assets such as government bonds and US Treasury bills under its current strategic asset allocation. The other 40% is invested in higher-risk assets such as stocks, real estate investment trusts, private equity and commodities.
She says the pension fund has recorded average return of 6.15% annually since its inception in 1997.
The GPF, which manages retirement savings of civil servants, had 1 trillion baht (US$31.50 billion) of assets under management as of end-July.