In 2017, when Thailand’s Government Pension Fund marked it’s 20th anniversary, it embarked on a mission to develop its asset allocation to tackle low-yielding fixed income markets and diversify away from a domestic bias. Five years on, GPF seems to have come a long way.
The fund, with a total investment portfolio of Bt462.4 billion ($14.2 billion) as of September 30 2022, aimed to shift its allocation more towards private markets as well as diversifying further overseas.
In January 2017, Man Juttijudata, then senior director of investment strategy, told AsianInvestor: “The investments we have been doing have become much more complex, and we are getting into new areas such as private markets.”
In 2017, GPF had exposure of 11.3% to such investments and a target allocation of 14.5%. By September 30 2022, that private market allocation had reached 23.61% of the total portfolio.
In March 2016, GPF was given the green light to raise the offshore allocation limit to 30% from 25%. By September 2022, the overseas allocation had climbed above 35% of the total portfolio, below the Ministry of Finance’s 40% cap on foreign investment announced in 2020.
In the two years leading up to 2017, GPF had been developing the investment process in such a way that some of the complex decisions previously made at board level would be handled more by the investment committees, Juttijudata said in January 2017.
“It is quite difficult to make invest decisions piece by piece,” he added, “so we have managed to streamline that process and create more efficiencies.”
The previous three levels of approval – an internal investment committee (IC), an external IC and the board – meant it could take at least three months to make an investment, said Juttijudata. “Now we have cut the approval time to about six to eight weeks.”
Juttijudata is still with with GPF. His title is now deputy secretary general at the investment strategy and external fund management group.
PARTNERSHIPS AND BONDS
GPF has also stepped up its ESG stance as part of efforts to establish partnerships with other asset owners overseas.
Srikanya Yathip, secretary general of GPF told AsianInvestor in July 2021 that such collaborations would be as much about knowledge sharing as it is about accessing deals. She named Australia’s Hesta Super Fund as one of the pension funds she had recently spoken to.
“Having a chance to talk with them [Hesta] means we can share our common issues, interests and experience; for example, I asked them to share how they manage and communicate plan choices for their members,” Yathip said in July 2021.
In October 2022, Yathip said that GPF was seeing opportunities in the corporate bond and emerging market bond space, as valuations start to improve and bond yields are likely to be higher than expected inflation. She said the pension fund had seen investment opportunities arise as positive real yields exist, given that bond yields are likely to be higher than expected inflation.
“We put more emphasis on corporate credit, emerging market credit,” Yathip said. “We think they represent more opportunities than ever, and we believe that they are establishing the roles as a portfolio hedge to equity risk.”