Nine fund managers vie for GSIS contract

REPORT FROM BUSINESSWORLD STATE PENSION fund Government Service Insurance System (GSIS) will soon choose two or three global asset managers to invest up to $1 billion in overseas investments after nine funds made final presentations to its board. BNP Paribas, Credit Agricole, Credit Suisse, Deutsche Asset Management, ING Investment Management, Northern Trust Global Investment, Pacific Investment Management Co., Goldman Sachs and Societe Generale are vying for the contract, the GSIS said in a statement Thursday. The GSIS said the fund managers had to agree to an 8% minimum return on investment. The $1-billion budget, which will be divided between the two or three managers, is equivalent to a fifth of the pension fund’s total funds available for investments. "This strategy aims to diversify risks on our investments, maintain consistently high investment yields and put into practice good corporate governance over our investments," GSIS President and General Manager Winston Garcia said. He earlier said the contracts would be awarded a couple of weeks after presentations have been made. Two months ago, the GSIS launched a selection process for fund managers that will manage its investments abroad. Thirty-six fund managers from Asia, Europe and the United States originally applied for the contract, the GSIS said. "We are truly impressed with the depth and very thorough process that GSIS adopted in choosing the fund managers," said Carlo Venes, regional head of the institutional sales and business development division of ING-Hong Kong. The GSIS investments abroad is part of the diversification program for its investment portfolio. Diversification is expected to cut portfolio risk by spreading the risk across different types of assets, instruments, geographical areas, sectors, markets and industries. The GSIS charter allows it to invest in foreign mutual funds, foreign currency deposits, foreign currency-denominated debts and nonspeculative equities, among other financial instruments and assets. The GSIS said its investment strategy has a precedent, with with some foreign and globally recognized pension fund systems investing considerable portions of their portfolios offshore.