The Philippines’ Social Security System (SSS) has granted seven mandates totalling 7 billion pesos (US$134 million) to five local fund managers as part of the state-backed pension fund’s efforts to diversify its portfolio and improve returns.
There were three mandates each for pure equity funds and balanced funds, and one for pure fixed income. Each mandate was allocated 1 billion pesos.
BPI Asset Management and Trust Corp. bagged a contract for all three mandates for a total 3 billion pesos. Rizal Commercial Banking Corp. and ATRAM Trust Corp. were each granted a balanced fund mandate, and Metropolitan Bank and Trust and Co. and Philequity Management Inc. each secured a pure equity mandate.
"The SSS management believes that it can benefit from the investment value-added services of the fund managers, such as training, access to proprietary investment analysis and information and access to business analytics," Aurora Ignacio, president and chief executive officer of SSS, says in a statement on June 8.
The pension fund did not provide any other details, including whether the mandates were opened for tender, and when the managers were selected. A spokesperson for the SSS did not immediately respond to questions from Asia Asset Management.
The SSS’s move to hire external fund managers reflects those of other pension funds in neighbouring countries and further afield as they look to tap outside investment expertise in their search for higher returns.
In Malaysia, for instance, the Employees Provident Fund, the country’s largest pension fund, outsourced 117.56 billion ringgit ($28.24 billion) to external fund managers as of end-2018, 2.6% more than in 2017.
In North America, the Canada Pension Plan Investment Board, which manages the assets of the country’s largest pension fund, says it appointed 274 external managers in the financial year ended March 31, 2019, compared to just 62 in 2006.
The SSS manages compulsory pension contributions from private sector employers and employees in the Philippines.
The fund had close to 500 billion pesos of assets under management as of end-2018, 43% of which was invested in government bonds and 19% in stocks, with the rest in bank deposits, loans to members, corporate bonds, real estate and funds of funds.