GSIS taps ING, Credit Agricole for $1-B global fund

State-owned Government Service Insurance System (GSIS) has tapped ING Investment Management and Credit Agricole Asset Management (Singapore) Ltd. as fund managers for its $1-billion Global Investment Program (GIP).

GSIS said that after a month of thorough deliberation and review, its Board of Trustees chose ING and Credit Agricole for providing the best investment proposals for the GIP.

Nine global fund managers vied for the mandate to manage the $1-billion fund.

“The GSIS Board feels ING and Credit Agricole best satisfied our criteria anchored on competitiveness and transparency, and offered the best proposals relative to our investment program,” GSIS president and general manager Winston Garcia said during the weekend.

ING, which has a solid presence in the Philippines since 1990, has around $503 billion in assets under management (AUM). The asset allocation it has proposed for the GIP includes a mixture of global high dividend, global property securities, global fixed income and alternative investments.

For the GIP, the GSIS has set an absolute return requirement of a floor of eight percent in annual return on investments (net of fees) and a ceiling of seven percent on the portfolio volatility.

Credit Agricole, meanwhile, has an AUM of approximately $725 billion and is given a fund manager rating of “M2” by Fitch. Organizations that earn such a rating are considered generally stable, well-capitalized investment management companies with a track record of profitability.

Furthermore, Credit Agricole is regarded as the 4th largest banking corporation in the world and number one in France in terms of Tier 1 capital. The company is also the pioneer in absolute-return strategy in Europe.

The asset portfolio it has proposed to the GSIS composed of global bonds, Asian equities, global equities fund, and cash equivalents.

There is still a possibility that more asset managers may be named in the future, Garcia said.

“All other short-listed candidates may be considered for future mandates. We’ll make an announcement, if any, at the appropriate time,” he added.

Among the other asset managers that contended for the GIP include BNP Paribas, Credit Suisse Asset Management Ltd., Deutsche Asset Management, Northern Trust Global Investment, Pacific Investment Management Co., Goldman Sachs and Societe Generale.

Garcia also said GSIS will soon announce the global custodian for the billion dollar fund once the state pension fund finishes its review of the proposals submitted by State Street Bank and Trust Co., Citibank N.A., and JP Morgan Chase N.A. (Hong Kong).

The $1-billion budget for the GIP is equivalent to approximately 12 percent of the total loans and investment portfolio of the GSIS.

The GSIS said it decided to invest abroad so that it can meet the future claims and benefits of its members.

“The GSIS has a continuing obligation to see to it that our assets will not only perpetually grow, but will be sufficient to match the contingent and future liabilities of the GSIS to its members,” Garcia said.

“Thus, there is a need for GSIS to constantly seek prospective investment areas and strategies, be it here or abroad,” he added.

The program is also consistent with the good investment practices of public pension funds such as the California Public Employees’ Retirement System and the California State Teachers’ Retirement System.

It is also consistent with the direction being taken by Asian neighbors such as the National Social Security Fund of China, the Government Pension Fund of Thailand and the Employees’ Provident Fund of Malaysia.