Govt pension plan hiring 9 foreign fund managers
The Government Pension Fund has started hiring nine foreign fund managers for its offshore investments, instead of relying on mutual funds, to cut costs and boost returns.
Secretary-general Sopawadee Lertmanaschai said yesterday that the GPF had assigned Bt45 billion of funds to foreign managers.
The GPF could reduce costs for investment by 1.2 per cent after it turned to foreign fund managers last year, she said.
The GPF allocates Bt64 billion for investment in foreign financial markets, of which 30 per cent is overseen by its own executives and the rest by foreign managers.
Four foreign companies are managing Bt21 billion for investment in stock markets and five foreign companies are managing Bt24 for investment in fixed-income markets.
Four benchmarks are used in selecting fund mangers – business principles, qualified people, professional management, and performance and service.
Towers Watson, a consulting firm recognised by the market, is also advising the GPF.
Among the foreign firms passing the GPF’s criteria this year are UK-based MFS International and US-based Pimco.
Pension funds worldwide have adopted this strategy, since directly hiring fund managers has proved efficient.
“We’re confident that they will help us improve investment efficiency and offer higher returns to our members,” Sopawadee said.
Foreign asset classes make up about 20 per cent of the GPF’s investment portfolio but their share could be increased if foreign investment produces higher returns over the long haul.
As of February 29, the GPF had Bt339.12 billion invested in both local and foreign markets, she said.
The GPF’s investment portfolio spans stocks, fixed-income, property, commodities and private equity, but local bonds represented 64.91 per cent of the total at the end of February, which reflects its conservative policy to ensure the safety of its members’ savings.
Foreign analysts often criticise the GPF for having too heavy a weighting in bonds, resulting in low returns.
