GSIS completes fund pullout

THE GOVERNMENT Service Insurance System (GSIS) has finished repatriating its overseas investments back to the Philippines, an official said.

“By and large, I would say that the whole amount has been remitted,” GSIS Executive Vice- President for Finance Benedicto Jose R. Arcinas told BusinessWorld in a phone interview last Friday.

As of end-2010, the pension fund’s global investments were estimated to have grown to $690 million but Mr. Arcinas stressed the final figure would be known only by the second week of July after a report is finalized.

The original figure was $600 million but the investments had grown to $690 million due to earnings.

“There is an estimated $80,000 worth of cash dividends that we are still expecting from our investments in the Amundi balanced fund.

There is still no exact date for the remittance… dividends are declared by the companies and our fund managers have no control when the dividends will be paid and remitted to us,” Mr. Arcinas said.

These dividends, he clarified, were declared when GSIS was still invested in the fund.

GSIS, the pension fund for state employees, started to repatriate its offshore investments in April as returns failed to meet its expectations.

The $1-billion Global Investment Program was launched in 2008 in a bid to diversify the pension fund’s investments and revenue streams.

Of the total $1 billion, $600 million was invested in developed markets such as United States, United Kingdom, Germany, Japan and Australia through fund managers Pimco and Amundi, while the remaining $400 million was never deployed.Returns, however, tanked amid the global financial crisis.

GSIS President and General Manager Robert G. Vergara has said the pension fund wanted to increase its exposure in the local stock market, and has been eyeing banks, energy, utility and property firms through real estate investment trusts. He said GSIS is targeting, in particular, a mix of 10% equities and 50% fixed-income, gradually increasing this to 12% equities and 45% fixed-income.

Mr. Arcinas also said part of the transferred investments would be channeled to the government’s public-private partnership or PPP projects.

“For the PPP, we would look forward to invest in projects that are commercially viable or projects where we know we can get good returns because the money that we would be using is the money of our members,” he said.

“With the country’s progress now, we think there would be demand for power so we might be a little bit aggressive with our investments in that sector. But still, GSIS cannot absolutely determine where it would invest until we see the projects.”

What is clear for now, he added, is GSIS would contribute P50 billion to the P200 billion that it, together with Land Bank of the Philippines, Development Bank of the Philippines and the Social Security System — the pension fund for private sector employees — would pool to pay for the right of way of PPP projects.

Mr. Arcinas stressed there were better “growth opportunities” in the domestic than in the global markets, which lately have been rocked by various crises.

“Our presence in the developed markets may not be a good thing right now because of all the news coming from the US and the euro zone,” he said.

US recovery is faltering while Europe faces a sovereign debt crisis.

The GSIS Treasury group and three local fund managers, namely the Philam Asset Management, Inc., the Metrobank Trust Banking Group and the BDO Trust and Investments Group are managing the transferred funds at present.

Asked if GSIS would redeploy the funds abroad, Mr. Arcinas answered, “it would depend on the developments in the global markets, if we start seeing sustainable recovery in the US then that may be a signal for us to start redeploying to the global markets.” –ANN ROZAINNE R. GREGORIO, Reporter, Businessworld