Government Service Insurance System, with 860 billion Philippine pesos ($19.4 billion) of investible funds, plans to ask its board to raise the cap on equities to 30% of assets from 20%, President Robert Vergara said in an interview Wednesday in Manila. Equities now account for about 18.5% of the fund's investments, he said.
“Bonds right now are just digging a big hole for me,” Mr. Vergara said. “As we approach the 20% threshold, we want to ask for an increase in the weighting that we can have in equities.”
The benchmark Philippine Stock Exchange index has risen 8.4% this year, the second-best performance among Asia's benchmark equity gauges, on expectations falling oil prices will boost consumer spending and propel economic growth. Peso-denominated government bonds have returned less than 1%, vs. 6.6% in 2014 and 17% in 2011, according to data compiled by Bloomberg.
The fund's plan to boost stock holdings echoes that of regional peers. Japan's public retirement savings manager more than doubled its target allocation for equities in October, while Thailand's biggest government pension fund said in January it's seeking approval to reduce sovereign debt holdings.
GSIS, as the Philippine fund for more than 1 million state workers is known, needs at least an 8.5% return on investments to meet its obligations to members until 2048. Last year, its investments returned 8.9%, Mr. Vergara said.
At the end of 2014, about 48% of GSIS' funds were in fixed income, 26% in loans to members, 17% in equities and about 4% in real estate, Mr. Vergara said. The balance was in cash.