The Government Pension Fund (GPF) plans to adjust its investment strategy to reduce its equity portfolio amid projections of higher financial volatility, opting to increase investment in low-risk assets, especially domestic fixed-income securities.
Secretary-general Vitai Ratanakorn said the GPF will reduce high-risk investment assets next year as sentiment in the global equity markets is not conducive to buoyant returns.
The fund wants to reduce equity investment to 19% in 2019, while increasing investment in government bonds to 48-50%, said Mr Vitai.
Investment in corporate bonds will remain at 20%, he said.
Mr Vitai said the focus will be on Thai government bonds and money market investment assets.
Although returns from Thai government bonds are lower than those of US Treasury notes, net returns after swaps are not significantly different, he said.
"Our strategy will be more conservative and we will de-risk our asset portfolio to generate a moderate return," said Mr Vitai.
"We will reduce equity investment in developed markets, emerging markets and the local market."
The majority of GPF's investment is allocated in bonds, around 65% of total assets under management (AUM). The value of total AUM is 880 billion baht.
Of the bond investment, 45% of the total AUM is in government bonds and 20% in corporate bonds.
Equity investment makes up 23% of total AUM, with the rest identified as alternative investment assets.
The GPF is required to allocate at least 60% of its investment portfolio in debt instruments, which are categorised as low risk.
Mr Vitai said the GPF will gradually increase its investment in alternative assets, such as offshore private equity, real estate, property funds and derivatives. However, this investment strategy requires time, he said.
The fund also plans to improve and promote its mobile app platform. The GPF aims to have 1 million members use this mobile app in 2019, up from around 100,000 users at present.
