SSS placed P3B in 3 domestic mutual funds —Dooc

The Social Security System (SSS) has invested P3 billion in three domestic mutual funds to raise additional revenue.

The money was taken from the state-run pension fund’s investment reserve fund (IRF).

SSS president and CEO Emmanuel Dooc said that starting on June 27 the pension fund invested P1 billion each in PhilEquity Fund Inc., Sun Life of Canada Prosperity Balanced Fund Inc., and Philippine Stock Index Fund Corp.
 
“This is the first time in 61 years that the pension fund invested in mutual funds. The deployment of P3 billion in domestic mutual funds, although modest in size relative to SSS’ size of about P500 billion is a significant first step in partnering with top local managers and has a lot of potential benefits,” Dooc said in a statement.

PhilEquity Fund is managed by Philequity Management Inc., while Sun Life of Canada Prosperity Balanced Fund is as managed by Sunlife Asset Management Company Inc. and Philippine Stock Index Fund is managed by BPI Investment Management Inc.

The P3-billion investment was deployed in tranches from June 27 to July 4, according to SSS.
 
“This is a big step for SSS. This is part of broadening its market-intelligence sources, discovering best practices and learning new investing styles that may be highly suitable to SSS. The competition brought about by performance-focused fund managers should result in improved total returns of the SSS funds,” Dooc noted.

The mutual funds were chosen through a competitive and transparent evaluation process.

The Social Security Commission has approved the accreditation of the mutual fund companies on July 12, 2017.

The approval to release P3 billion in six installments was given the green light on June 20, 2018.
 
“SSS’ investment in domestic mutual funds was made with due diligence and prudence in line with the basic principles of safety, good yield and liquidity,” Dooc said.
 
“The deployment is also a statement of confidence in the Philippine financial market.  While the capital markets may be in its usual 3rd quarter weakness brought about by inflation concerns and a global trade-war, and the longer-term view of at least two years, the SSS is confident that its deployment in the three mutual funds will be rewarding,” he said.

Under Republic Act 8282 or the Social Security Act of 1997, the pension fund is allowed to invest its reserve funds “in domestic or foreign mutual funds in existence for at least three years, provided, that such investments shall not exceed 20 percent of the IRF.”
 
The law also states that investments in foreign mutual funds must not exceed 1 percent of the IRF in the first year, but may be increased by 1 percent for each succeeding year. In no case should it exceed 7.5 percent of the IRF.
 
As of end-March, the SSS investment reserve fund stood at P498.633 billion.

Forty-one percent of the IRF is invested in government securities, 22 percent in equities, 17 percent in loans to members, 7 percent in bank deposits and corporate notes and bonds, and 6 percent in real estate.

The pension fund will soon bid out the management of P9 billion to local fund managers—each managing P1 billion.

“Results will be published within 90 days after opening of the bids. The winning bidders will be given notices to proceed after the procurement process is completed,” Dooc said. —VDS, GMA News