Govt Pension Fund to up alternative investments
In search of higher investment returns in the face of limited yields on local bonds, the Government Pension Fund (GPF) will invest Bt10 billion in global private real estate funds and infrastructure funds in the next few years.
GPF’s strategic-asset allocation plan calls for an adjustment of its portfolio, giving more weight to alternative investments. The plan will see the company’s alternative-investment portfolio increase from 6 per cent last year to 12 per cent of total investments by 2013. The fund manages total investments of Bt380 billion.
The fund will allocate 2 per cent of its 2012-2013 investments, or Bt7.5 billion, to global private real estate funds. The investments this year will reach Bt3.75 billion, with purchases beginning in the third quarter of this year and the remainder of the acquisitions occurring next year.
“The alternative investments became part of our plan last year,” said Sopawadee Lertmanaschai, the GPF secretary-general.
The move will help diversify risk incurred from both investments and inflation, as alternative-investment assets are linked closely with the inflation rate.
Sopawadee added that investment in infrastructure funds also feature in the plan, with a focus on OECD countries in Asia. These investments are expected to reach Bt3.8 billion, accounting for 1 per cent of its total portfolio. The investment will be equally invested from now through next year by 0.5 per cent each year.
Investing in bonds generates an average yield of 3-4 per cent, compared with 7-8 per cent per year for alternative investments.
“We are selecting a fund manager for our portfolio; we want to have two qualified companies,” Sopawadee said.
She said the investment environment is expected to grow more volatile this year due mainly to a slowdown in the global economy deriving from the prolonged debt crisis in the euro zone. In addition, the US economy is slowly recovering, prompting capital outflows from developed countries as investors seek benefits in emerging countries.
The fluctuating investment market will create limited returns, particularly on stocks and bonds, as global rates are trending downward, including in Thailand.
So far, the GPF has already invested in real estate worth Bt13.5 billion, accounting for 3.5 per cent of its portfolio, with 2.3 per cent or Bt9.1 billion tied up in private equities. In addition, it started investing in commodities last year worth Bt900 million, or 0.2 per cent.
