GSIS taps ING Barings for index fund

The Government Service Insurance System (GSIS) has appointed ING Barings as fund manager for its P10-billion Index Fund. The index fund is a basket of securities and other investible funds held by the government pension fund.

"ING Barings was also part of the Hong Kong index fund that managed the securities held by the Hong Kong government," said GSIS president and general manager Winston Garcia.

Garcia said the launching of the index fund would depend largely on the market conditions, and the ability of GSIS to absorb losses.

Securities held by the pension fund are a combination of blue chips and small board transactions. "With the kind of market we have today, it might not be wise to launch the fund just yet," Garcia said.

Sale of the securities also would also mean having to absorb losses since some of the issues were purchased at higher prices. Prices in general have dropped to levels below the real market values.

The GSIS does not have any limit as to how much it can invest for the expansion of its reserves. At the start of the year, the government pension fund had P181 billion in reserves.

"I can start with a $100 million to $200 million and assess their performance on a yearly basis," the GSIS head said.

He added that the fund managers would be given a leeway to choose the type of investment products for the GSIS funds. However, general guidelines must be agreed upon prior to signing any contracts. Expected to be part of the guidelines are the projected yield of return, the investment grades, and the preference for the conservative market.

By conservative, Garcia meant assured yields of not less than eight to 10 percent of principal. "I want a low risk venture as long as it can catch up with inflation but will give the GSIS a reasonable yield."

The original list of possible fund managers included Smith Barney and Merryll Lynch.