GSIS to invest in fixed sovereign bonds

Written by Writer on Thursday, October 23rd, 2008

GSIS to invest in fixed sovereign bonds

By Chino S. Leyco Reporter
The Manila Times
Thursday, October 23, 2008

STATE-RUN Government Service Insurance System (GSIS) is set to complete its remaining global investment program (GIP), although strategic adjustments have to be made on account of the global financial crisis.

In a briefing, Winston Garcia, GSIS president and general manager, said the pension fund would make some strategic adjustments for the remaining $400 million GIP and would focus its investment on fixed sovereign bonds given the global situation.

Garcia said GSIS is currently examining 30 fund managers who applied for the issuance, adding, “we favor fund managers who [are into] fixed income bonds.”

GSIS has given fund managers the flexibility to determine their investment strategy, both in the asset allocation and the instrument selection and where they want to put the investments.

Out of the 30 entities, Garcia said the GSIS would choose two fund managers with expertise in handling sovereign bond fixed income and at least $100 billion in assets under management (AUM).

The fund managers are also required to comply with the absolute return requirement of an 8-percent floor limit in annual return on investments and a ceiling of 7 percent on the portfolio volatility.

The selection process for the fund managers would start next month and announcement of the two fund mangers will be by January 2009.

The pension fund earlier said that starting in the second quarter of the year, its global investment program value increased by 5 percent to P1.25 billion at end-September.

The GSIS earlier named ING Investment Management and Credit Agricole Asset Management (Singapore) Ltd. as global fund managers for the first batch of GIP, with each given a mandate of $300 million each. Citibank, N.A. was named as the global custodian.