GSIS plans more equity investments

MANILA, Philippines - With the local stock market continuing a resiliently bullish trend, the country’s largest pension fund, Government Service Insurance System, has turned overweight on Philippine equities with the aim of stepping up its exposure to 20 percent of its total investible funds by the end of the year.

In a roundtable discussion with The STAR Wednesday night, GSIS president and general manager Robert G. Vergara said the fund is particularly bullish on banks, property and  infrastructure stocks as well as the conglomerates sector amid rosier prospects for the domestic economy.

Vergara said the GSIS, a key institutional investor in the country, currently has P123 billion invested in the stock market, spread in about 60 issues, including blue-chips.  The amount accounts for 17 percent of the fund’s investible funds.

 â€œWe want to increase our equity exposure to 20 percent by the end of this year,” Vergara said, noting that a diversified exposure should allow GSIS to continue to get some bang from the stock market.

This would bring GSIS’s equity exposure to the maximum limit it had set.

Vergara said the state-run agency now has total assets of  P705 billion, 45 percent of which comprise government bonds (P380 billion).  Loans to members currently account for 30 percent.

Vergara said he expects the local market to sustain its  bullish trend as low interest rates and faster economic growth boost investor sentiment. 

Last year, the  main benchmark index or PSEi grew 33 percent, driving the  market’s value to $223 billion.  It now trades for 21 times reported earnings.

Vergara said expectations the country would achieve the much-coveted investment grade status would spur a record rally in equities.

The country’s gross domestic product (GDP) is expected to grow to as much as  six to seven percent this year as President Aquino ramps up spending on infrastructure to attract more investors into the country.

Vergara said the fund has also began diversifying its income sources with the $625 million infrastructure fund set up in partnership with the Asian Development Bank, Dutch pension fund asset manager Algemene Pension, and Macquarie Infrastructure and Real Asset (MIRA).

The fund, called Pinai or Philippine Investment Alliance for Infrastructure, will invest in a mix of both brownfield and greenfield projects across the infrastructure sector including transport, power, renewable energy, water and telecommunications.