GPF portfolio strategy shifts to handling risks
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GPF portfolio strategy shifts to handling risks

The Government Pension Fund (GPF), the second-largest fund in the country, has shifted its investment strategy this year to creating a portfolio capable of handling appropriate risks, rather than maximising profits.

According to Songpol Chevapanyaroj, secretary-general of the GPF who recently took on the role, the fund's investment strategy a decade ago focused on profit maximisation.

However, from now on the emphasis will be on how well the portfolio can manage risks, such as those from wars, he said.

Last year the GPF's investment return was 1.46%. This year the fund expects to better last year's return, said Mr Songpol.

In the first five months this year, the fund recorded a 3% return.

The minimum return target for the GPF is set at the 10-year average inflation rate plus at least 2%.

The GPF has 1.2 million members and funds totalling 1.2 trillion baht, making it the second-largest fund after the Social Security Fund.

He said GPF's asset allocation comprises 60% international, which is the legal limit, and 40% invested domestically, with around 4% of the portfolio in the Stock Exchange of Thailand.

The fund also invests in commodities such as oil and gold to accommodate uncertainty. Gold makes up 1% of the portfolio in an effort to hedge against risks.

The proportion of gold is low, but has increased recently and there are opportunities to continue to strengthen this position, said Mr Songpol.

"We have invested in both oil and gold since the Iran-Iraq war to hedge against risks, including those stemming from the shaky economic indicators of the US, which haven't been promising," he said.

"This has led to uncertainty regarding potential interest rate cuts by the US."

As for risk factors this year, Mr Songpol said they include wars, the election in the US and the Federal Reserve's interest rate policies.

He said the outlook for the Thai stock market seems to be improving as more tourists are returning to Thailand.

The ultimate challenge for businesses is how to adapt to the US-China trade war, as it will affect the Thai economy, said Mr Songpol.

The GPF, a retirement fund for civil servants, aims to ensure sufficient income.

Based on previous studies, the GPF categorised sufficient retirement savings into three levels: adequate requires 5.1 million baht, comfortable 8.2 million and luxurious 15.2 million. These levels assume an average life expectancy of 77 for men and 83 for women.

The GPF plans to review these retirement savings amounts to ensure they align with current conditions and are within each occupational group's reach, he said.

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