GPF looks to 9% return for members

“We will manage the fund more proactively to seek a return, which has to be above inflation, for members.
“It’s difficult to give an exact estimate of the return this year. But it could be 8-9 per cent in the best case,” Sopawadee Lertmanaschai, GPF secretary-general, said yesterday.
The fund will prepare to invest in alternative assets by the third quarter while proposing to the Finance Ministry to lift the fund’s ceiling on overseas investment for diversification.
It expects the Stock Exchange of Thailand Index to touch 1,100 points.
However, the worst case points to the global economic slowdown, which stems from unresolved European debt problems, weakening US economy and their impacts on Asian countries, particularly China. If the situations turn out like this, GPF’s return could turn negative, Sopawadee said.
Given this year’s global economic outlook and expected volatility for stock markets, GPF would monitor the markets closely.
Amid expected market volatility, the GPF’s three- and five-year returns could give a better reference, she said. GPF recorded an average annual return of 6.83 per cent for the past three years and 4.85 per cent for the past five years.
The fund has yielded satisfactory returns on investment and could always beat inflation.
To cushion itself against high market volatility, the fund has adjusted its investment strategy by expanding into alternative assets such as global properties and infrastructure projects. It expects to start investing in those classes in the third quarter.
The fund has also studied investment rules for a global private fund and would select a financial adviser possibly by the third quarter.
GPF wants to increase its overseas exposure, whose ceiling is 25 per cent of the investment portfolio. The plan is under study and will be forwarded to the finance minister.
Overseas investment will likely focus on emerging countries with solid economic fundamentals and high growth potential like South Korea, Malaysia and Australia.
The major variables for investment are the unresolved European sovereign debt crisis, which could pull the European economy into recession, opportunity for the US economy to stage a recovery due to its internal stimulus, emerging economies’ growth potential from capital inflows and domestic investment, and higher liquidity from the interest rate downtrend. The Thai economy has also started recovering from the floods.
The Thai stock market is expected to provide good results with average earnings growth of about 12 per cent in 2012, but politics could be a risk.