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THE
prevailing weakness in the local equities market is
prompting state-owned pension fund Government Service
Insurance System (GSIS) to beef up investments abroad.
In an
interview Monday, president and general manager Winston
Garcia said they will invest between $200 million and
$400 million in global and diversified investments,
which include fixed-income equities and nontraditional
securities.
“In this
kind of a market, we have to have a diversified
portfolio,” said Garcia.
The
investments, which GSIS targets to launch in the second
half, form part of the $1-billion fund it has allocated
for overseas investments. So far, about $600 million
have already been invested in various instruments.
“The
Philippine market is too small for the size of the GSIS
funds. We have to address the nagging problem of absence
of diversification and dearth of investment
opportunities which prevent the fund from maintaining
its actuarial solvency,” he said.
Garcia
said GSIS will look for another fund manager for the new
round of investments. Earlier, the pension fund tapped
Credit Agricole Asset Management (Singapore) Ltd. and
ING Investment Management for the management of initial
global investment.
According to Garcia, the invested funds are yielding an
average return of 1.6 percent a month which, for him, is
already an attractive rate of return.
The
pension fund has set an absolute return requirement of a
floor of eight percent (net of fees) and a ceiling of
seven percent on the portfolio volatility for fund
managers.
As of
end-September 2007, GSIS’s net operating revenues
amounted to P35 billion because of higher returns from
local investments.
Gains of
P10.4 billion from the sale of stocks were also recorded
during the first three quarters of the year from P756.3
million in the same period a year earlier.
All
these contributed to the 13.8-percent increase in gross
revenues of the GSIS from January to September 2007 to
P65.3 billion. |
