CalPERS decision was based on the report from its consultant, Wilshire Associates which retained its rating on the Philippines, allowing the fund to retain the country in its list of "permissible emerging equity markets."
CalPERS said the Philippines was among the countries retained in the list which include Argentina, Brazil, Chile, Czech Republic, Hungary, India, Israel, Jordan, Malaysia, Mexico, Peru, Poland, South Africa, South Korea, Sri Lanka, Taiwan, Thailand and Turkey.
On the other hand, the pension fund dropped Colombia, China, Egypt, Morocco, Pakistan, Russia, Venezuela and Indonesia.
"Emerging markets have continued to improve under our policy," said Rob Feckner, CalPERS president. "We are witnessing a greater level of transparency and an increased effort by countries to reform their markets to support institutional investment."
The Bangko Sentral ng Pilipinas (BSP) welcomed CalPERS’ decision which came on the heels of a credit rating downgrade by Japan Credit Rating Agency, the only major ratings agency that still considers the Philippines as investment grade.
BSP Deputy Governor Amando Tetangco said CalPERS’ decision recognized the reforms that have been implemented over the last few months.
"It’s a recognition of the reform efforts to improve the economic environment and the investment opportunities available in the country," Tetangco said.
However, Tetangco stressed that the reform program was still incomplete and the government would have to roll-out the rest of its reform agenda in order to sustain the momentum.
CalPERS is known as an influential pension fund, compelling corporations and even sovereign republics to comply with international best practices in corporate governance, labor practices and even human rights.
In its report, Wilshire said that out of the 27 countries reviewed, 12 improved their scores, 11 had lower scores and four, including the Philippines, remained the same.
The Philippines received a rating of two, the threshold for permissible emerging markets.
The Philippines has just been removed from the so-called "cure period" for countries that had scored above the 2.00 threshold on a given year but have fallen below the threshold the following year.
Wilshire said there were 19 countries that meet the 2.00 threshold in the 2005 analysis and four (Argentina, Sri Lanka, Thailand, and Turkey) scored below the 2.00 threshold in the 2004 analysis, while the other fifteen countries continued to remain above the threshold.
"Specifically, Argentina and Turkey were granted the one-year "cure period" in 2004 and have subsequently improved their scores enough to meet the 2.00 threshold," Wilshire said. "No countries that scored above 2.00 in 2004 fell below that threshold in 2005."