PHILIPPINE NEWS SERVICE — Government Service Insurance System, the pension fund for state workers, has received the go-signal from the central bank to buy as much as $600 million from the spot market to fund its overseas investments, government sources said yesterday.
GSIS started investing abroad early this year when it hired ING Investment Management and Credit Agricole Asset Management to handle funds worth an initial $1 billion for the pension fundâ€™s global investment program. ING and Credit Agricole each received $300 million worth of funds to manage.
GSIS said in January that it planned to increase its overseas investments to $2.5 billion in one to two yearsâ€™ time.
GSIS is seeking a net return of 8 percent for its overseas investments, which both ING and Credit Agricole have delivered so far.
The GSIS has the option to hire other banks to handle its funds if the return on investments fall below its benchmark.
ING, which has been operating in the Philippines since 1990, has $503 billion in assets under management. It has proposed to GSIS an asset allocation consisting of a mixture of global high dividends, global property securities, global fixed income and alternative investments.
Credit Agricole, meanwhile, has $726 million in assets under management. It has received an M2 fund manager rating from Fitch. Organizations that are rated M2 are considered generally stable, well-capitalized investment management companies with a track record of profitability.
ING and Credit Agricole beat BNP Paribas, Credit Suisse Asset Management Ltd., Deutsche Asset Management, Northern Trust Global Investment, Pacific Investment Management Co., Goldman Sachs and Societe Generale, among others, for the GSIS account.
GSIS also tapped Citibank NA as the global custodian for its overseas investments because of its â€œextensive proprietary networkâ€ covering 47 of 86 markets.
As global custodian, Citibank is responsible for collecting the income on the investment, transactions settlement, fund valuation, compliance monitoring, transition management and securities lending.
Citibank beat State Street Bank and Trust Co. and JP Morgan Chase NA (Hong Kong) for GSISâ€™ the global custodian deal.