The GPF investment philosophy emphasizes the safety of the principal fund, good returns that outperform the long -term inflation rate, proper assets allocations, diversified investment choices and categories that survive perpetual changes of current globalization trends, efficient investment control and supervision process. All these factors help adjust our investment yields to counter balance cyclical economic effects and generate satisfactory returns to our fund members.

Other than maximizing good returns for its investments, the GPF also makes it a policy to pay equal attention to its investment supervision role by publishing its investment policy statement for self-compliance and to inform related parties of mutual anticipated roles and responsibilities. This investment policy statement also outlines investment guidance and risk management framework which aims at protecting the fund against possible investment risk.

The GPF always reviews its assets allocation plan to be in line with circumstances and changing economic conditions. Investment evaluation benchmarks are consistently adjusted to truly reflect the fund's performance level. It is the fund's policy to comply with investment disciplines prescribed by the framework of the Government Pension Fund Act and applicable ministerial regulations and to invest prudently and efficiently in order to earn the highest possible acceptable returns for its members.

In order to assure organizational credibility, fund members' confidence and international acceptability, the GPF applies the principles of good corporate governance in its investment administration. The fund has also placed utmost emphasis on assignment and segregation of authority and responsibilities among individuals, both in management and supervisory positions, ranging from the Chairman and members of the Board of Directors, the chairman and members of the sub-committee, the Secretary General, as well as staff of all levels. This in fact is regarded as a key driver for successful organizational management and a practice guideline for good fund management. In addition, the internal audit and adequate disclosure become mechanisms of importance, which reveal the GPF operational efficiency and transparency. These mechanisms also ensure that GPF stakeholders are treated with equitable access to all relevant information, both financial and membership data, that is presented with consistency, accuracy and completeness.

Good corporate governance is regarded as an essential principle designed to oversee performances of different stakeholder functional duties. It helps maximize benefits of the GPF members and excels the GPF role as a good social citizen. The GPF anticipates that its governance practices could in turn lead other institutional and individual investors to focus more on the importance of good governance. This could certainly enhance the local capital and money markets with better governance environment and further endow local economy and overall society with sustainable growth and development.

Asset allocation

Asset allocation covers investment allocations of assets managed by the GPF fund in accordance with the classified framework of its objectives. The allocation is based on rational investment proportions which take into account all concerned factors such as risk, returns, instrument nature, and investment objectives. Asset allocation is an essential element in fund management, particular to a compulsory mega fund such as the GPF. Due to the large number of fund members with such diversified profiles, proper management of different risk return schemes within the fund investment portfolio will enhance higher returns opportunities. Good assets allocation requires not only a good balance of targeted yields and acceptable levels of risk, but also a considerable awareness of the fund objectives, together with equitable concerns of members' welfare as a whole; whereas the economic environment and money & capital market conditions also require some weight.

Investment ratio currently approved by the Board of Directors is 80:15:5 between fixed income instruments, equity and property, respectively.

Investment Guidelines

It is the GPF's policy to invest in activities which yield benefits and welfares to the nation and the overall fund members. The invested activities must have good management system that reflects strong social concerns. The fund does not encourage the following investment activities:

In making investment decisions, the GPF not only considers past records and potential performances of the prospects , particularly in terms of their risk and returns, but also gives strong weight to their management standards , and corporate governance practices. The GPF believes that good corporate governance defines suitable structure of management duties towards shareholders and reflects management honesty and integrity in performing such duties. It is also fundamental to sustainable success for long-term corporate growth.

Similarly, essential concerns in operating any assets management institutions, namely mutual funds, pension funds or even the GPF fund, are honesty and integrity of fund managers to principal owners. Good corporate governance, hence, becomes the basic guideline principle for these institutions. Proper internal controls are also required to detect and protect fund management institutions against potential faults and errors that may damage their reputation and capital funds. A series of international financial scandals that occurred in the recent past have given us an idea of the degree of expanded damage that could eventually cause a wide spread disruption in general business confidence.

In this light, our organization - the GPF, emphasizes the importance of the above mentioned aspects by establishing relevant rules, regulations and compliance codes to administer against possible occurrences of any wrongdoings. The Corporate Governance and Compliance Department is set up to consistently oversee the GPF internal operations and monitor governance activities of corporations in which the fund invests. The monitor results are regularly reported at the management meetings which are attended by the GPF management, relevant sub- committee members and the GPF directors.

In administering the GPF activities, work efficiency and internal control are equally highlighted as a standard mechanism for protection against any potential problems, as accountability for its fiduciary roles is the main GPF concern.