Thailand’s Pension Considering Investing in China and India

Thailand’s pension plan for government employees, the Government Pension Fund (GPF), is considering investing in Indian information technology (IT) firms and Chinese microchip producers, the fund’s secretary general, Srikanya Yathip, told Bloomberg in a phone interview.

The government pension has approximately $33 billion in assets under management (AUM), and the majority of its overseas funds are currently invested in developed markets such as the United States and Europe. However, with the tumultuous nature of the pandemic, some of the pension’s staff members believe investing in emerging markets could be a good hedge.

“Developing markets such as China and India should offer the outlook for better returns because of the resiliency of their economies during the pandemic,” Srikanya told Bloomberg.

The Thai government previously only allowed 40% of the pension’s assets to be invested in foreign equities; however, a recent proposal would increase that number to 60%. Final word on whether the proposal is passed will take at least a few more months, according to Srikanya.

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Currently, the pension has about 25% of its AUM invested in foreign debt securities such as bonds. Another 13% is invested in global equities. The pension maintains the majority of its portfolio in fixed income, with Thai corporate bonds making up the largest chunk of asset allocation, with 23.7%. The second largest allocation is Thai government bonds, which make up about 22.4% of the portfolio, according to the pension’s website.

This past year, Thailand’s government pension returned just 3.3%, a 30% decrease from its 10-year average return of 4.77%.

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Tags: Bloomberg, Bonds, China, Emerging Markets, Fixed-Income, India, Pension, Thailand

The investment portfolios for the University of Notre Dame and the University of Southern California (USC)’s endowments returned 53.2% and 43.2%, respectively, for the fiscal year that ended June 30. For Notre Dame, it was the second-highest one-year return in its history, raising its asset value to just under $20.3 billion, as of the end of the fiscal year. Meanwhile, USC’s returns increased its endowment’s asset value to just over $8 billion.

Notre Dame easily surpassed its benchmark’s 28.3% return, and raised its five-, 10-, and 20-year annualized returns to 17.4%, 12.8%, and 10.6%, respectively. Over the same time periods, the endowment’s benchmark has recorded annualized returns of 10.5%, 7.5%, and 6.2%, respectively.

“The investment portfolio is highly diversified across strategies, sectors, and geographies with a high allocation to equities for growth to support university finances,” Notre Dame said in its annual report. “To further diversify exposure to public and private equities, the multi-strategy portfolio provides allocations to a variety of other assets and risk-reducing approaches with return streams less correlated to the equity markets.”

As of the end of the fiscal year, the portfolio’s asset allocation was 45.9% in private equity, 31.2% in public equity, and 22.9% in a multi-strategy class.

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Meanwhile, USC’s 43.2% return outpaced both a blended 70% MSCI All Country World Index/30% Bloomberg US Aggregate Bond Index, and the Consumer Price Index (CPI) plus 5% over the near, medium, and long term. The endowment reported five-, 10- and 20-year annualized returns of 13.7%, 9.9%, and 8.2%, respectively. The 70/30 benchmark registered annualized returns of 11.3%, 8.1%, and 6.8%, respectively, over the same time periods, while the CPI plus 5% benchmark returned 7.4%, 6.9%, and 7.1%, respectively.

The current asset allocation for USC’s portfolio is 45.5% in global equity, 18.4% in venture capital, 9.4% in absolute return, 8.4% in private equity, 5.6% in natural resources, 5.2% in fixed income, 4.4% in real estate, and 3.2% in cash.

“The university employs a long-term and active investing philosophy that responds to changing environments and takes advantage of valuation extremes,” the USC Investment Office said in the endowment’s annual report. “This approach is designed to enable the endowment to grow in real terms, providing meaningful annual returns that keep pace with inflation, while minimizing risk and volatility.”