GSIS reviews invest strategy in wake of global crisis

The Government Service Insurance System (GSIS), the state pension fund, is reassessing its investment strategy in the wake of the financial meltdown in the US.

GSIS president and general manager Winston Garcia said that for the $400 million remaining under its $1 billion Global Investment Program, GSIS would tap fund managers that are good in fixed income securities.

“We are reassessing our strategy. We will tap fund managers who are good in the fixed-income business,” Garcia told reporters.

He said that GSIS would stay away from stock markets for now given the volatility in equities markets across the globe.

Garcia said it would be naming the fund managers by January next year after doing the interviews in November.

Earlier, it has named Citibank, N.A. as the global custodian of its $1 billion fund to be invested abroad.

Of the amount, GSIS has already awarded the mandate to invest $600 million to fund managers ING Investment Management and Credit Agricole Asset Management (Singapore) Ltd.

ING and Credit Agricole are managing funds starting at $300 million each.

The fund managers are given the flexibility to determine their investment strategy, both in the asset allocation and the instrument selection.

They are, however, required to comply with the absolute return requirement of an eight percent floor limit in annual return on investments (net of fees) and a ceiling of seven percent on the portfolio volatility.

The $1-billion budget for the GIP is equivalent to approximately 12 percent of the total loans and investment portfolio of GSIS.

The GSIS said it decided to invest abroad so that it can meet the future claims and benefits of its members.

The program is also consistent with the good investment practices of public pension funds like the California Public Employees’ Retirement System and the California State Teachers’ Retirement System, GSIS also said.