William M Mercer has scored a victory over its investment consulting rivals by clinching a mandate to advise the Government Pension Fund of Thailand on asset allocation, according to Singha Nikornpun, deputy secretary-general at GPF in Bangkok.
Frank Russell, Towers Perrin and Watson Wyatt had also pitched for the business.
The GPF is a young institution, founded only three years ago, and manages retirement assets for 2.5 million government workers. It has Bt150 billion ($3.4 billion) in assets under management, all of which is invested onshore. It has been establishing itself as Thailand's most sophisticated institutional investor, outsourcing about a third of its investments to domestic fund managers and beating the corporate governance drum. Its senior staff is foreign-educated and often have overseas experience.
It has sought an international investment consultant to review its asset allocation strategy. Singha explains management is confident it has got the strategy right, but wants a "second opinion", as part of its fiduciary responsibility to members. Furthermore, the GPF is lobbying the Ministry of Finance to let it increase its equities weighting from 10% to 25%, and if approval is given, may need advice on rebalancing.
Singha would not discuss fee arrangements. Mercer executives in Singapore declined to talk about the mandate. Singha said the appointment was based on Mercer having the best knowledge of the Thai market.
But ensuring its asset allocation is on track is only the first step. The GPF also plans to invest in offshore bonds and equities starting next year, and it will need an investment consultant to help it select fund managers. Singha reckons up to 5% of assets could go offshore initially, pending approval from the Bank of Thailand.
That, however, will require a different mandate. GPF officials say Mercer would have to bid for that as well, and that its current work is completely separate.