GSIS investing more in fixed income securities

MANILA, Philippines — State-run pension fund manager Government Service Insurance System (GSIS) is pursuing a balanced investment strategy this year as assets stood at P1.13 trillion despite the volatile financial markets last year.

In a press conference, GSIS executive vice president for the finance group Gracita Gilda Bocanegra said the pension fund manager would continue to invest in equities as well as fixed income markets both in the Philippines and abroad.

“We will continue to invest because given the life of the fund, we are still net inflow,” she said.

Given the higher interest rates, Bocanegra said GSIS would continue to raise the share of its investments to fixed income securities.

“It is common knowledge when interest rates rise may be you don’t need to investing more in equity but maybe more on fixed income,” she said.

The Bangko Sentral ng Pilipinas (BSP) jacked up interest rates by a total 175 basis points last year to prevent inflation from spiraling out of control.

According to Bocanegra, the financial assets composed of fixed income and equity securities experienced price volatility in 2018 with the Philippine Stock Exchange index (PSEi) falling by nearly 13 percent last year.

“The portfolio clearly experienced price volatility in terms of valuation but this is clearly just valuation. In fact in 2018, we increased our holdings in domestic and global equities,” she said.

About 36 percent of the total assets of GSIS are allocated for loans to members.

On the other hand, about 20 percent are earmarked for public securities in the PSE market and global equities, while 13 percent were invested in foreign denominated assets.

The diversification of the investment abroad, she explained, continued despite the decision of the GSIS board not to pursue the multi-asset strategy program wherein it allocated $800 million supposed to be managed by Deutsche Asset Management International GmbH and Schroder Investment Management Ltd.

“Last year although the GSIS did not continue with its multi asset program with external managers, GSIS, however, increased its investments in foreign denominated assets through US dollar fixed income bonds, exchange traded funds and our continued investments in Asia infrastructure assets,” she said.

Bocanegra said about 39 percent of the total assets of GSIS were invested in fixed income markets.

“In the same year we also increased our investments in fixed income assets in order to capture higher yields,” she said.