Thailand's GPF Shifts Strategy, Boosts Gold Holdings by 107%

The Government Pension Fund (GPF) of Thailand, which manages 450 billion dollars in assets, is shifting its investment strategy following a lackluster performance in the first half of the year. The fund is now focusing on gold, commodities, and global stock markets in an effort to revive its returns and meet its annual performance targets. This strategic pivot comes as the fund seeks to capitalize on potential rebounds in these sectors, which have shown signs of recovery after a challenging period. The GPF's decision to diversify its portfolio reflects a broader trend among institutional investors who are increasingly looking to hedge against market volatility and seek out higher-yielding assets. By allocating more resources to gold and commodities, the fund aims to benefit from the stability and growth potential these assets offer. Additionally, the GPF's move into global stock markets indicates a belief in the resilience of international equities, despite recent economic uncertainties. This shift in strategy underscores the fund's proactive approach to managing its investments and its commitment to delivering strong returns for its beneficiaries.

In the first half of the year, the GPF's return rate was a mere 1.19%, significantly below its target. However, the fund remains optimistic about achieving its goal of a 3% annualized return rate by 2025. To reach this target, the GPF is actively adjusting its investment portfolio. The fund has increased its holdings in gold and commodities, betting that heightened trade tensions and geopolitical risks will drive up demand for safe-haven assets. According to its official data, the fund's gold holdings more than doubled in the six months leading up to June 30, reaching 0.43% of its total assets. This marks a significant shift, as the fund only began investing in gold in 2022. The GPF is also expanding its overseas investments in bonds, stocks, and real estate to boost performance, given the relatively low returns from domestic stocks and debt.

The fund's strategy is underpinned by the belief that the global market environment is becoming more favorable for risk assets. The fund's management sees the potential for reduced market uncertainty as U.S. trade policies become clearer, coupled with a downward trend in global interest rates. These factors are expected to create a conducive environment for equity markets. The GPF's asset allocation remains largely unchanged, with approximately 57% of its assets still invested in international and domestic fixed-income securities. However, the fund has reduced its exposure to both local and foreign equities from 22.6% to 19% of its total portfolio by the end of 2024, citing market volatility caused by U.S. tariffs. Despite these adjustments, the GPF's return rate for 2024 is projected to be 3.5%, more than double the 1.46% return rate achieved in the previous year. The fund's performance in 2022 was negatively impacted by market volatility following the COVID-19 pandemic, resulting in a return rate of -1.5%, the first investment loss since 2008.