Retirement funds flow into bond market in Q1

MANILA, Philippines - Retirement funds flowed mainly into the bond market in the first quarter this year, dumping the more volatile equities whose luster waned amid worries over a shaky US economy, said consulting firm Watson Wyatt based on a survey. The survey covered 155 retirement funds managed by 11 local fund managers and an investment house. Results, which were released Thursday, showed that government securities and other fixed-interest instruments accounted for 53.16% and 28.97% of the total asset portfolio, respectively. The total assets amounted to P37.59 billion with an average fund size of P242.52 million. Stocks, whick have suffered heavy beating this year due to risk aversion triggered by fears of a US recession, took up only 9.99% of the total share, dropping by nearly one-and-a quarter percentage point from 11.17% during a previous quarterly survey. Investments in corporate loans and real estate combined totaled 5.30%. An earlier survey by Watson Wyatt showed that government securities made up more than 54% of the total assets, followed by fixed-interest investments at 26.92%. Corporate loans and real estate accounted for only 5.59% of the managed funds. Moderating inflation, whose surge this year weighed on corporate profits and dampened investor interest, should provide better prospects for the equities market for the remainder of the year, an industry official said. "For the period covered by the survey, it means there was a shift from equities to fixed-income instruments because of risk aversion. The government securities would give a more stable return," Metrobank executive vice president and Trust Banking Group head Josefina Sulit told BusinessWorld. Metrobank emerged as the strongest performer among the investment managers surveyed, with a return of 13.56% a year for the last 5 years to March this year. "We can see a better environment moving forward because we expect inflation to go down... The market would have settled by then," Ms. Sulit said. — Maria Eloisa I. Calderon, BusinessWorld