The second-largest Philippine pension fund plans to hire outside money managers for the first time.
The Social Security System, whose assets have almost doubled since 2006 to $9 billion, initially will allocate 3 billion pesos ($67.2 million) to three outside managers, Executive Vice President Edgar Solilapsi said. The managers will oversee a portion of the pension fund's debt and equity holdings. Guidelines for selecting managers are still being drafted, Mr. Solilapsi said.
“You don't just diversify assets,” Mr. Solilapsi said in an interview in Manila on Tuesday. “You have to diversify the brains making the investments to manage the risk. We prefer experts to do it for us.”
“Outsourcing the pension fund's management of investments is a global best practice,” said Paul Joseph Garcia, the head of the institutional business at BPI Asset Management in Manila. “This lowers risk and will benefit the members of the pension fund.”
The pension fund has about 400 billion pesos in its investment reserve fund, Mr. Solilapsi said. It had 62% of holdings in government securities and equities as of June, according to its website. About 20% was in loans to members, 10% in bank deposits and 8% spread across corporate bonds and real estate.
The Government Service Insurance System, the nation's biggest pension fund, has eight external managers after hiring three in January to manage 2 billion pesos of equity investments.