Reshaped allocation underscores GPF's advance
AsianInvestor’s second annual Institutional Excellence Awards were introduced to highlight best practice, with awards handed out in 16 institutions collectively managing $3.5 trillion.
The final Institutional Excellence award in our markets category, for Southeast Asia, goes to Thailand's Government Pension Fund. Robust risk management has enabled it to expand and adopt a more global outlook, setting an example of best practice in long-term investment.
The winners were announced on October 30 and received their awards at an exclusive ceremony and dinner on December 2 at The South Beach hotel in Singapore.
We thank all those who contributed their thoughts to these awards. The full list of write-ups appears in the December issue of AsianInvestor magazine, and more details of our decision-making process can be found here.
Markets category
Southeast Asia
Government Pension Fund (Thailand)
Since the 2008 global financial crisis GPF has sought to reshape its allocation, adding new strategies to its fixed-income-heavy portfolio of old. A more global outlook and desire to expand mark GPF out as a public pension fund on the move.
A driver for the overhaul of GPF’s strategic asset allocation was government policy to allow members who joined the state pension system before GPF was set up in 1997 to return to the old pay-as-you-go model.
In total, $1 billion out of GPF’s $20 billion in assets (5%) was withdrawn – changing the profile of remaining members has changed.
But whatever the driver, GPF has gained a reputation for savvy investment, with its robust risk management process and selective approach to alternatives.
GPF made its first move into absolute return in 2013, issued its first multi-asset mandate in 2014 and invested in Chinese equities and bonds via the qualified foreign institutional investor (QFII) quota it received last year. The fund’s managers are now aiming to raise exposure to private markets.
Moreover, the fund is working to handle more of its global equity exposure in-house, aiming to raise this from 10% now to 30% by 2017. It also plans to separate FX as an asset class next year, managing US dollar/baht in-house and outsourcing other pairs.
Being a public fund, expansion is subject to government approvals. The fund’s board is lobbying the ministry to raise its offshore allocation limit to 40%, from 25%, and GPF is lobbying to become the core manager of a proposed Thai sovereign fund.
External investing partners are being cultivated and, in particular, GPF is in early-stage talks on partnering a North Asian sovereign for private markets investments.
Having moved to provide external domestic managers with absolute-return benchmarks, GPF is providing an example to peers on the benefits of long-term investment by setting seven-year-plus targets.
2015 winners already unveiled:
Institutional category
Reserves manager: Monetary Authority of Singapore
Insurance company (general account): Ping An Life
Public pension fund: Bureau of Labor Funds
Private pension fund 2015: Jardine Matheson
Endowment: National University of Singapore
Markets category
Australia/New Zealand: the Future Fund
Mainland China: China Life Insurance
Hong Kong/Taiwan: Cathay Life Insurance