Thailand’s Social Security Office, a $46 billion state pension fund, hopes to proceed this year with a long-planned build-up of its foreign investment portfolio and capabilities after an internal restructuring, AsianInvestor can reveal.
In an interview at SSO’s office in Bangkok, Chompoopen Sirithorn, head of strategy and research, said: “We not only want to build our international allocation, but also to diversify into different asset classes including alternatives."
The fund had intended to expand its overseas exposure for some time with an ultimate target of a 30% allocation, she noted, but had been held back by internal operational limitations.
But the fund’s investment division has now been restructured, following a decision in November to separate the division into two main areas. “We made the internal changes to allow for the expansion of teams, both foreign investment and research," said Sirithorn.
“Formerly, we had an investment department and a research department together under the investment unit of the SSO. We made the decision to separate the two, so we have carved out research and strategic asset allocation from the portfolio management side."
The SSO has for several years planned to broaden its asset allocation but in practice its asset allocation has changed very little, she said. "In the last two years, we have added global equity in funds, but it's a very small portion."
From 3% to 30%
Currently, the SSO’s investment portfolio is 97% domestic and just 3% overseas. About 88% of it comprises fixed income investments, with 10% allocated to domestic equities and 2% to onshore alternative assets.
Implementation has been a problem for the SSO. An overseas investment mandate was earmarked two years ago, with plans to issue requests for proposals for up to $2 billion in active management, including its first international equity mandates.
But there was a hold-up, due to what Sirithorn calls “an internal operational problem. So we hope that this year we will be able to have a more diversified position.”
“We should have a 30% allocation to foreign investment. That is in our five-year strategic plan, but it will be challenging [to reach 30%] and practically it could take longer than that,” she said.
Under the new structure, Sirithorn is no longer chief investment officer, having taken over that role in September 2015 following the departure of Wim Phromphaet. He left to become CIO of the Thai arm of Malaysia's CIMB-Principal Asset Management, based in Bangkok.
In her new role, Sirithorn retains control of five-year strategic asset allocation and research, but has handed the portfolio management and asset allocation implementation to Anan Charupun, who was formerly the head of risk management at the SSO.
She said the next phase will be an expansion of staff numbers within the investment division, especially on the asset allocation side, since this will require a whole new team.
The fund currently has about 20 people in the investment department, comprising fund managers and research analysts. Overall the division is 55-strong, including risk management, compliance and back office staff.
SSO has no fixed number in mind for the expansion of the team. Sirithron said the asset allocation team will almost certainly be needing the help of outside asset consultants to begin with, as they build up their own capability, with a view to doing it all themselves in the future.
She said the expansion plan would be gradual. "The hiring process is not easy," she said. "It’s always hard for us because hiring people is a challenge and staff turnover is common for this industry".
Sirithorn has worked at the SSO for more than eight years, having started in July 2007 as a buy-side research analyst, before moving on to become a risk analyst and, in 2011, joining the investment team as an equities manager.
The SSO was established in September 1990 to provide social security services to its members and their families. It currently has about 13 million members and is the largest fund in Thailand and second-largest institutional investor after the $159 billion Bank of Thailand.
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