The Social Security Office (SSO) has set a long-term return target of 5.5% to 6% per year, with projected returns of 40 billion baht this year.
Win Phromphaet, the SSO's head of global and real estate investments, said the agency will also increase its investments abroad including in foreign equities, real estate and commodities.
The SSO, which manages retirement assets for more than 9 million workers nationwide, will focus its global investments in the form of 60% debt instruments, 20% equities and 20% real estate and other alternative assets.
It has appointed Thanachart Asset Management to establish a private fund to manage its global equity and property investments.
Mr Win said the SSO will increase its global asset exposure by US$200 million this year, with a focus on high-yield emerging market assets.
Key markets include Poland, South Korea, Mexico, Malaysia and Australia, where 10-year bond yields offer favourable returns of 3-5% per year, he said.
Mr Win said the SSO is also looking to invest in Indonesian debt.
While that country remains ranked below investment grade, upgrades are possible due to its strong economic potential.
Asean bond funds are another attractive option, given the increase in economic potential for many countries in the region with the creation of the Asean Economic Community in 2015.
Mr Win said with the more aggressive investment strategy, global investments are expected to rise to 5% of SSO assets.
As of June, the SSO had 920 billion baht in assets under management with 600 billion invested in government bonds and 82 billion in state enterprise bonds.
The fund had 80 billion baht invested in local equities, with another 41 billion invested in Thai corporate debentures.
Mr Win said the SSO is also interested in investing in new infrastructure funds due to its long-term investment structure and potential for annual returns of more than 6% per year.
"We're also studying the possibility of investing in gold and other commodities as a future investment, but we need to be careful," he said.
Investment returns for the SSO last year were 6.4%, with a five-year return of 7.17% per year and 7% since the fund's inception in 1991.
Mr Win said the fund will begin paying compensation to retirees starting the end of next year, with payouts expected to reach a peak in 20 years, increasing pressure on the fund to boost its returns.
In the first half of this year, returns totalled 21.1 billion baht _ 16 billion from interest earnings and the rest from equities dividends.
About the author
- Writer: Nuntawun Polkuamdee
Position: Business Reporter