Thailand’s GPF looks to new law to raise foreign investment

The boss of Thailand’s second-largest pension fund hopes that proposed changes in the law will help her diversify more into overseas markets. She is particularly bullish on China.
Thailand’s GPF looks to new law to raise foreign investment

Thailand’s civil service pension fund and its second-largest retirement vehicle is pushing for reforms that could see its foreign assets swell to as much as 60% in the long term.

Government Pension Fund (GPF) secretary general Srikanya Yathip, who manages assets worth Bt444.6 billion ($14 billion), said she believes opportunities overseas will continue to be more attractive than those at home.

“When you invest in the global market, you diversify the portfolio better than if you invest in a concentrated internal market,” she told AsianInvestor.

Srikanya Yathip, GPF

One of the biggest success stories among the fund’s overseas forays has been its backing of Moderna, the US pharmaceutical company that was the second to receive US FDA (Food & Drug Administration) approval for its Covid-19 vaccine in December 2020. It highlights how, in Srikanya’s view, investing abroad gives access to a wider range of sectors.

“The businesses available to us in Thailand are really traditional, such as consumer products. In contrast, in the US you have travel, tourism – you have all kinds of businesses.”

As of May 2021, GPF had approximately 37% of total assets invested abroad, just below the Ministry of Finance’s 40% cap on foreign investment, which had only been raised from 30% in October. Now, the secretary general is hoping this regulation will change again soon, in line with GPF’s ambition to find more overseas investments like Moderna.

However, while Srikanya and her team have already secured the board’s approval to raise the allocation to the global market from 40% to 60%, the Thai parliament and cabinet must also say yes, a lengthy process that has delayed previous reforms such as the introduction of a National Pension Fund to increase coverage among private sector workers.


The fund maintains some exposure to manufacturing sectors in Europe. However, of all markets, GPF is particularly bullish on China, not only because it was the fastest country to recover from Covid-19, but also because it offers plenty of opportunities to invest in technology and e-commerce, two sectors that fared particularly well during the pandemic.

“China is large enough to be profitable even if it wasn’t exporting and just relying on domestic demand. So, China is a very interesting market for us,” she said. The only major economy to expand last year, China posted a 2.3% growth in gross domestic product in 2020.

GPF invested in China for the first time in October 2020, and it now takes up 0.7% of its portfolio. The pension fund is also subject to a 40% cap on risky assets, in line with the Government Pension Fund Act that established the fund in 1996.

Here again, GPF is at its limit. As of May 2021, 61% of its portfolio is invested in fixed income, 17% in public equities and 15% in alternatives including real estate, private equity, infrastructure, and commodities.

But bonds no longer guarantee the same returns they did 10 years ago, Srikanya said. On Tuesday (June 22), a 10-year Thai government bond yielded 1.66%, compared to over 4% about a decade ago, in July 2011.

The pension fund also bet successfully on gold last year. It turned to the precious metal when the pandemic hit returns from both debt and equity and the US dollar slumped.

“It was good timing: we invested in gold just as it was about to increase in value and sold it off when it was about to reach its peak,” she explained. But it’s not an asset that GPF plans to hold for long periods, she added.

“It doesn't add value like company profits; today's gold tomorrow is still gold.”


GPF is working with its investment consultants to source deals in tangible assets, Srikanya said, reiterating plans  its chief investment strategy officer Man Juttijudata spoke about at an AsianInvestor conference in June.

“We believe investment into alternative assets like infrastructure are in line with the interests of a pension fund as a long-term investor,” Srikanya said.

However, it’s not easy to find a good deal and doing so requires good timing. “If you come too soon, you have to invest a lot of money and wait for long. If you come too late, it could mean the profit is already gone.”

She is less enthusiastic about commodities, which she views as volatile, except for copper, which is attractive due to its use in semiconductor manufacturing, she explained. Global demand for semiconductors increased sharply in 2021 in line with advances in renewable energy and artificial intelligence, and increased demand for electric cars.

Overall, the fund posted returns after expenses of 4.79% in 2020, below the 6.59% achieved in 2019. Expecting further Covid-19 headwinds, GPF is targeting a 3.4% return in 2021.

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