Thailand’s $54b pension fund scouting for international advisers

Thailand's capital city Bangkok at dusk. Photo: Marla/Pixabay

Thailand’s biggest money manager is looking for guidance from international advisers to help boost returns after its assets under management surged almost two-thirds in five years.

The Social Security Office, which manages social-security funds for 14 million Thais, is seeking to draw new investment guidelines and will invite foreign companies to compete for advisory services, said Jeerisuda Iamsakul, the state agency’s head of investment strategy and research department. With the recent equity plunge affecting about 14 percent of the total assets invested in stock markets, the fund’s first-half results missed last year’s return of about 6 percent, she said, declining to give further details.

“We need expertise from an international company with experience and good track record in advising other large pensions funds,” Jeerisuda said in an interview at her office Monday. “It’s a very challenging time for the fund, with extremely volatile financial markets and low interest-rate environment.”

Thailand’s state fund has joined other large global investors in reassessing strategies as concerns over U.S. policy tightening, trade conflicts and an economic slowdown have hit sentiment for equities — even more so in emerging markets. Australia’s largest pension fund said this month it will cut its exposure to stocks, while Thailand’s $26 billion Government Pension Fund has shunned both emerging-market bonds and shares amid weakening currencies.

The 1.8 trillion baht ($54 billion) fund, which manages members’ compulsory contributions, invests about 60 percent of its assets in “safe” bets such as bank deposits, government bonds, companies’ investment-grade debt and mutual funds, Jeerisuda said. The rest goes to equities, properties, commodities and real estate investment trusts.

It seeks to maintain an annual return of at least 5 percent to be able to meet expected members’ compensation and payments for at least 20 years, she said. The gains are used to pay for health care, unemployment, disability, death and retirement benefits.

“The fund size has grown enormously in the last decade, making it an urgent and challenging need to boost the return for future payments,” Jeerisuda said.

Bloomberg