GSIS to invest $2.5B overseas

State-owned Government Service Insurance System (GSIS) plans to invest up to $2.5 billion overseas as part of its investment strategy, its top official said yesterday.

GSIS president and general manager Winston Garcia said the state pension fund needs to diversify its investments given the narrowing list of investment choices in the country.  

“We plan to allot 25 percent of our assets or up to $2.5 billion overseas. The timing is perfect,” Garcia told reporters during the signing of GSIS’ investment management agreement with its international fund managers Credit Agricole Asset Management (Singapore) Ltd and ING Investment Management.  

Under the agreement, which involves $1 billion in funds under GSIS’ Global Investment Program, the two fund managers will handle funds starting at $300 million each.  

Garcia said the move to invest abroad would allow GSIS to meet future claims and benefits of its members.  

”The Philippine market is too small for GSIS funds. We need to expand our horizons and search for better opportunities,” he said.

Garcia said that its global investment program is consistent with sound investment practices of public pension funds such as the California Public Employees’ Retirement System (CalPERS)  and the California State Teachers’ Retirement System as well as the direction being taken by pension funds among Asian neighbors.  

These include the National Social Security Fund of China, the Government Pension Fund of Thailand and the Employees’ Provident Fund of Malaysia.  

The fund managers are given the flexibility to determine their investment strategy both in the asset allocation and the instrument selection.  

However, they are required to comply with the absolute return requirement of an eight percent floor limit in annual return on investments and a ceiling of seven percent on the portfolio volatility.  

ING Investment Management said it looks forward to working with GSIS and to help it meet its mandate despite a dynamic investment and economic environment. 

“We are optimistic of more mandates of this nature given the Philippines’ increasing amounts of investible monies and the desire by large institutional accounts for a more diversified portfolio that include offshore components,” said Cesar Zulueta, managing director of ING Investment Management Philippines. 

ING Investment Management is part of the ING Group, a Netherlands-based global financial institution  specializing in banking, insurance and asset management. ING has had a solid presence in the Philippines since 1990 and has around $503 billion in assets  under management. 

Credit Agricole, meanwhile, has total assets under its management of approximately $725 billion.  

Denys de Campaigneulles, deputy chief executive officer of Credit Agricole Asset Management also welcomed the agreement. 

“You can count on us to deliver both performance and service that will match your expectations,” he said during yesterday’s ceremony.