The Government Pension Fund (GPF) is reducing investments in assets that may be affected by war and increasing investments in gold and oil to mitigate risk.
According to Songpol Chevapanyaroj, secretary-general of the GPF, fund management this year is more challenging than last year because of the risk of wars and elections in several countries, as well as uncertainty regarding interest rate directions.
"This year, we will adjust investment proportions by reducing assets that could be affected by war and increasing investments in alternative assets such as gold and oil, which help to mitigate risk," he said.
Gold and oil account for about 5% of the GPF's portfolio.
Mr Songpol said this year the fund is also reducing investments in the capital market to some extent because of market uncertainties.
"Though we are reducing risks in the capital market, this does not mean we are avoiding investment in the capital market," he said.
Regarding interest rates, Mr Songpol said the unclear direction of interest rates in the US creates investment uncertainty, making it difficult to pick markets for investment.
The Federal Reserve's delay in reducing interest rates implies the US economy is relatively healthy and the US stock market is stabilising or improving, he said.
The impact on the US economy of the war in the Middle East may be minimal, said Mr Songpol.
Therefore, investing in the US market is still prudent, he said, adding that GPF does invest in the US.
Regarding Thai investments, Mr Songpol said the performance of the Stock Exchange of Thailand index does not align with the results of listed companies, some of which are posting profits and paying dividends.
Many companies are still in a good position, he said.
"Even though many companies have market values lower than the book values, it does not mean the quality of management of those companies is poor," said Mr Songpol.
"Investors are still focused more on returns on stock prices than dividends. The Thai stock market needs time to adjust."
Regarding war's effect on the Thai economy, he said Thailand continues to export food, which is crucial during times of conflict.
As for the fund's investment targets this year, the GPF does not view investment returns on an annual basis because it is a medium- to long-term investment fund, said Mr Songpol.
The GPF targets investment returns using a 10-year average inflation rate plus at least 2% as the target.
Last year the GPF posted an investment return of 1.46%, with assets under management of 1.3 trillion baht and 480,000 members.
For the first four months of this year, the unofficial investment return was around 2%, he said.