Philippine mandate goes to ING and Credit Agricole
State pension fund GSIS says the two fund management companies scored the highest on competitiveness, transparency and investment proposals for the $1 billion overseas mandate.
Philippine state pension fund Government Service Insurance System (GSIS) has awarded its $1 billion mandate to invest overseas to ING Investment Management and Credit Agricole Asset Management (Singapore).
ING and Credit Agricole beat seven other global fund managers for the mandate, which marks GSISÆ first foray into international capital markets under its global investment program (GIP). A GSIS spokesperson says the pension fund has yet to decide how ING and Credit Agricole will divide the $1 billion mandate.
ôThe GSIS board feels ING and Credit Agricole best satisfied our criteria anchored on competitiveness and transparency, and offered the best proposals relative to our investment program,ö says GSIS president and general manager Winston Garcia.
GSIS notes in a statement that ING, which has around $503 billion in assets under management worldwide, has had a solid presence in the Philippines since 1990.
ING proposed an asset allocation that includes a mixture of global high dividend, global property securities, global fixed income and alternative investments.
GSIS notes that Credit Agricole, which has around $725 billion in assets under management worldwide, has a fund manager rating of M2 from Fitch. That rating is given to generally stable, well-capitalised investment management companies with a track record of profitability, the pension fund says.
Credit Agricole proposed an asset allocation that includes global bonds, Asian equities, global equities fund and cash equivalents.
GSISÆ basic requirements from the fund managers is a minimum annual return on investment of 8% net of fees and a ceiling of 7% on annual portfolio volatility.
GSIS will announce soon its choice of global custodian for the mandate, once it completes its review of the proposals submitted by State Street Bank, Citibank, and JPMorgan & Chase.
The GSIS is moving to invest overseas to meet the future claims and benefits of its members.
ôThe GSIS has a continuing obligation to see to it that our assets will not only perpetually grow, but will be sufficient to match the contingent and future liabilities of the GSIS to its members,ö Garcia says. ôThus, there is a need for GSIS to constantly seek prospective investment areas and strategies, be it here or abroad.ö
The $1 billion mandate û which makes up around 12% of GSISÆ total loans and investment portfolio û is just a starting point, and that figure will likely increase over time, Garcia says.
ôAll other short-listed candidates may be considered for future mandates,ö he says. ôWeÆll make an announcement, if any, at the appropriate time.ö
The other fund managers that made it to GSISÆ shortlist for the $1 billion mandate included BNP Paribas, Credit Suisse Asset Management, Deutsche Asset Management, Northern Trust Global Investment, Pacific Investment Management Company, Goldman Sachs, and Societe Generale.
Investing overseas is the only way to achieve the diversification GSIS needs to ensure both capital preservation and consistent returns. GSIS will have a tough time generating returns for its members if it continues to stick with Philippine shares because of the ôlimitedö choices and relatively low volume, Garcia says. Low interest rates and the absence of strong secondary fixed-income market in the Philippines are also limiting factors.
GSIS is also considering handing over the management of its entire portfolio to investment managers.
ôOur plan is to privatise the management of our funds,ö Garcia says. ôFund managers will be better at managing our funds. We do not have the network, the resources and the expertise that the fund managers have in order to really have a well-planned investment strategy for a particular investment portfolio.ö
ING and Credit Agricole beat seven other global fund managers for the mandate, which marks GSISÆ first foray into international capital markets under its global investment program (GIP). A GSIS spokesperson says the pension fund has yet to decide how ING and Credit Agricole will divide the $1 billion mandate.
ôThe GSIS board feels ING and Credit Agricole best satisfied our criteria anchored on competitiveness and transparency, and offered the best proposals relative to our investment program,ö says GSIS president and general manager Winston Garcia.
GSIS notes in a statement that ING, which has around $503 billion in assets under management worldwide, has had a solid presence in the Philippines since 1990.
ING proposed an asset allocation that includes a mixture of global high dividend, global property securities, global fixed income and alternative investments.
GSIS notes that Credit Agricole, which has around $725 billion in assets under management worldwide, has a fund manager rating of M2 from Fitch. That rating is given to generally stable, well-capitalised investment management companies with a track record of profitability, the pension fund says.
Credit Agricole proposed an asset allocation that includes global bonds, Asian equities, global equities fund and cash equivalents.
GSISÆ basic requirements from the fund managers is a minimum annual return on investment of 8% net of fees and a ceiling of 7% on annual portfolio volatility.
GSIS will announce soon its choice of global custodian for the mandate, once it completes its review of the proposals submitted by State Street Bank, Citibank, and JPMorgan & Chase.
The GSIS is moving to invest overseas to meet the future claims and benefits of its members.
ôThe GSIS has a continuing obligation to see to it that our assets will not only perpetually grow, but will be sufficient to match the contingent and future liabilities of the GSIS to its members,ö Garcia says. ôThus, there is a need for GSIS to constantly seek prospective investment areas and strategies, be it here or abroad.ö
The $1 billion mandate û which makes up around 12% of GSISÆ total loans and investment portfolio û is just a starting point, and that figure will likely increase over time, Garcia says.
ôAll other short-listed candidates may be considered for future mandates,ö he says. ôWeÆll make an announcement, if any, at the appropriate time.ö
The other fund managers that made it to GSISÆ shortlist for the $1 billion mandate included BNP Paribas, Credit Suisse Asset Management, Deutsche Asset Management, Northern Trust Global Investment, Pacific Investment Management Company, Goldman Sachs, and Societe Generale.
Investing overseas is the only way to achieve the diversification GSIS needs to ensure both capital preservation and consistent returns. GSIS will have a tough time generating returns for its members if it continues to stick with Philippine shares because of the ôlimitedö choices and relatively low volume, Garcia says. Low interest rates and the absence of strong secondary fixed-income market in the Philippines are also limiting factors.
GSIS is also considering handing over the management of its entire portfolio to investment managers.
ôOur plan is to privatise the management of our funds,ö Garcia says. ôFund managers will be better at managing our funds. We do not have the network, the resources and the expertise that the fund managers have in order to really have a well-planned investment strategy for a particular investment portfolio.ö
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