The Government Pension Fund (GPF) is expecting gains from investments in gold, commodities and private equity to help counter a slump in domestic stocks, following a period that is seen its performance struggle.
The portfolio will return more than 3% in 2024, up from 1.5% in 2023, said Songpol Chevapanyaroj, secretary-general of the state pension fund. The fund has added holdings of gold and commodities as a bet on inflation and lingering geopolitical conflict, he said.
GPF, which manages 1.4 trillion baht (US$38 billion), has expanded overseas investments into bonds, stocks and property in a bid to boost performance amid low returns from local equities and debt.
"There will be more extreme volatility with ongoing geopolitical conflicts and the upcoming United States presidential election," Mr Songpol said in an interview Thursday in Bangkok. "Commodity, gold and private equities will still be our good hedging for any excessive movements in financial markets."
GPF, which oversees the retirement savings for more than 1 million government employees, has invested about 60% of its assets in international and domestic fixed income securities to safeguard its members' money. For risky assets, the fund boosted holdings of global private equity, commodities and gold to 5.2% of its total investments as of March 31, up from 4.5% at the end of last year, according to its website.
The fund had a return of -1.5% in 2022, its first investment loss since 2008, on rising volatility in the financial markets after the coronavirus pandemic, according to Mr Songpol. He declined to specify the asset allocation plan in the second half as the fund is in the process of reviewing its investment strategy.
For private credit investment, the fund still has limited knowledge about the market and needs more time to study before deciding to invest in this market, he said.