Thailand's $77 Billion Social Security Fund Targets Global Private Assets

Thailand's Social Security Fund will invest $11.6 billion in global private assets as part of a strategic overhaul aimed at improving its poor returns. The country's largest state fund, which supports healthcare and pensions for millions, seeks higher returns through diversification away from domestic-focused low-risk investments.

Thailand's Social Security Fund is set to invest $11.6 billion in global private assets, an executive disclosed to Reuters, as part of a strategic overhaul aimed at addressing its subpar returns. The nation's largest state fund, supporting healthcare, unemployment benefits, and pensions for 25 million workers, has averaged returns below 3% over the past decade, far below its potential.

Petch Vergara, an investment board member and former Goldman Sachs executive, stated in an interview that the fund's high concentration of domestic investments was unsustainable and posed a risk of bankruptcy by 2051 if not rectified. The current portfolio's low-risk investments, though seemingly safe in the short term, harm the fund's long-term potential returns.

This shift in investment strategy aligns with Thailand's ageing population, where one-fifth of the 66 million people are over 60, compared to 10% two decades ago. The fund's board, now comprising more reform-focused members elected last year, has approved a framework to lower low-risk asset weightings from 70% to 60% and to raise high-risk investments to 40% by mid-2027. By diversifying towards global private assets, the fund aims to secure higher returns akin to global peers who average 7.7% annual returns from similar investment portfolios.

(With inputs from agencies.)