Manila: The head of the Philippines' largest pension fund, which manages 1.7 trillion pesos ($30.3 billion) in assets, wants to pour more money into equities, while seizing opportunities to boost returns through investments and acquisitions.
The Government Service Insurance System that provides pension and benefits to more than 2 million public sector workers is eyeing partnerships with other state entities or even buying a few of them, according to GSIS President Wick Veloso, who was CEO of HSBC Holdings Plc's Philippine unit from 2012 to 2018.
Veloso, 57, who worked at HSBC for more than two decades, discussed a broad plan to transform the nation's top pension fund into an institution that will maximize use of government assets and in the process help improve public infrastructure including transport.
"We would like to review our investment policy guidelines to allow us to have the flexibility to take advantage of market opportunity," Veloso said in an interview in Manila on Tuesday.
He plans to leverage his long banking experience "- that includes leading the Philippine National Bank "- and put to work idle government land. He said improved returns should boost benefits to government workers including low-paid teachers "- half of GSIS's members "- many of whom resort to borrowing from loan sharks to make ends meet.
He also plans to purchase government corporations and bolster investment in listed companies. Such initiatives have been discussed internally and the rest of the GSIS board are open to them, Veloso said.
Investment Mix
Investments in infrastructure, power-related businesses, artificial intelligence and data centers are expected to help increase revenues, he said. The fund is also looking at mid-size gaming and consumer companies. GSIS can only purchase shares of companies with a market capitalization of at least 15 billion pesos.
GSIS invests about a third of assets, more than 500 billion pesos, in fixed income. Some 250 billion pesos are in equities, and another 250 billion pesos are in exchange-traded funds. About 300 billion pesos are lent out to state employees and 200 billion pesos deployed in properties.
There's room to put more money into equities, including those of foreign companies, Veloso said, declining to provide details. "Our investment strategy is flexible. This approach has allowed us to diversify our portfolio," he said.
About a fifth of the fund's investments are held in international assets.
GSIS reported a 70 per cent increase in net income to 113.3 billion pesos for the past year, with revenue up 33 per cent. And Veloso is confident that the strong performance could continue.
The Federal Reserve is likely to start cutting its key interest rate as early as the third quarter, which may be followed by the Philippine central bank, he said.
"Once the market starts to feel the easing, everyone will be searching for yields. Players might push the PSE index all the way to 8,000," he said, referring to the Philippine Stock Exchange Index.
