SSS sets aside P1B to invest in SME stocks

MANILA, Philippines - The Social Security System (SSS) has segregated P1 billion for its pioneer investment with listed small and medium enterprises (SMEs).

In a statement yesterday, the pension fund for private workers said the fund is part of an agreement with the Philippine Stock Exchange (PSE), which also includes investment seminars for SSS employees and members.

Reginald Candelaria, vice-president for capital markets division, said SSS would like to seek other avenues for better returns at a time of low interest environment.

“With the current low investment returns, we thought it would be a good opportunity to explore small investments,” he said in a phone interview.

“We can enter into companies either already listed or will have IPO (initial public offering). PSE can help us through exchange of information,” he added.

Under the plan, SSS will be allowed to funnel funds on companies with authorized capital between P100 and P500 million.

Before this, Candelaria said their “small-cap program” allowed the fund to invest on a company with the size below the 30-company PSE composite index.

“But, for a lack of a better term, they failed to give us the returns we wanted. But right now, this is more formal although the mechanics is still being drawn,” he said.

Around 97 percent of Philippine firms are SMEs, according to the Department of Trade and Industry. It is not clear how many of them are listed.

Last year, SSS booked an investment income worth P28.65 billion, down 15.96 percent year-on-year.

Of the total, P8.13 billion were earnings from its equity investments. Around 23 percent or P98.09 billion of the P426.66-billion in investment fund are in equities.

The rest are allocated to government securities (40 percent), salary loans (15.6 percent), corporate notes and bonds (eight percent), bank deposits (5.9 percent), real estate (4.7 percent), and housing and development loans (2.9 percent).

Candelaria said the fund is allowed to put up to 30 percent on stocks.

“Of course, we will be careful on this considering our previous experience, that’s why we only allocated P1 billion,” he said.