The Government Service Insurance System (GSIS) does not expect any income surge this year as the financial and equities market continues to roll in turmoil that has accompanied the global economic slowdown.
GSIS president and general manager Winston Garcia said yesterday that the state-owned pension fund manager could, at best, approximate its P41.5-billion net income last year.
“It is a tough year for us,” Garcial said. “We don’t expect an increase of net profit last year of P41.5 billion. We expect it should be flat.”
GSIS earlier said its profit this year could rise by 10 percent over last year due to higher higher returns from its foreign and domestic investments as well as the country’s strong economic growth.
However, economies began to shake under the force of spiralling oil and food prices that have pulled down consumer spending and pounded markets already reeling from the aftermath of the crisis in the US mortgage market.
Garcia said the equities market had gone down by 30 percent due to the global financial turmoil while the investment of GSIS has gone down by only one percent.
Fortunately, Garcia said the GSIS had steadily diversified its portfolio to reduce its sensitivity to the volatilities in the market. “Everybody is down but we are still gaining because of foreign exchange gains. In a diversified market, you will be able to control volatility,” he said.
GSIS announced earlier that it was tapping fund managers to manage its $400-million global investment program.
The state-run pension fund manager said over the weekend that it would hire one or two fund managers to handle what is left of its $1-billion investment fund intended for offshore investments.
Garcia said the fund managers would be handling the remaining $300-million to $400-million portion of its $1- billion global fund. He said the GSIS was accepting proposals from fund managers until Aug. 1 which would be evaluated by the bids and awards commission.
Garcia said that for GSIS’ global investments, the fund wanted to obtain consistent positive investment returns with capital preservation and sufficient liquidity over a three-year period.
According to Garcia, the return on the fund in US dollar terms should be at least an average of eight percent per year and should have an average volatility of not more than seven percent.
Under the GSIS criteria, bidders should have assets under management of at least $100 billion and its portfolio managers and analysts must have a minimum of 20 years cumulative professional experience in managing an absolute-return portfolio.