July 22, 2018, 11:59 pm
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SSS invests in mutual fund for the first time

The Social Security System (SSS) said it invested P3 billion from  its investment reserve fund (IRF) in three domestic mutual funds, the first time in its history. 

Emmanuel Dooc, SSS president, said the investment is divided equally between PhilEquity Fund Inc, Philequity Management Inc.; Sun Life of Canada Prosperity Balanced Fund Inc., managed by Sunlife Asset Management Company Inc.; and Philippine Stock Index Fund Corp., managed by BPI Investment Management, Inc..

“This is the first time in 61 years that the pension fund invested in mutual funds. The deployment of P3 billion in the 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.

 “This is a big step for the SSS. This is a 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,” he added.

 Dooc said the three mutual funds were chosen “through a competitive and transparent evaluation process.” 

“The deployment of P3 billion was done in tranches from June 27 to July 4,” he said.

The Social Security Commission approved the accreditation of the three mutual fund companies on July 12, 2017. The approval of the release of the P3-billion fund in six installments was 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 third quarter weakness brought about by inflation concerns and global trade-war, and the longer-term view of at least two years, the SSS is confident  its deployment in the three mutual funds will be rewarding,” Dooc added.

 The SSS said the investment in mutual fund is pursuant to the Social Security Act of 1997, which allows the fund to invest its investment reserve fund “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 stated that investments in foreign mutual funds shall not exceed one percent of the IRF in the first year, which shall be increased by one percent for each succeeding year, but in no case shall it exceed 7.5 percent of the IRF,” the SSS said.

SSS’ investment reserve fund as of end-March 2018 period stood at P498.633 billion wherein bulk of it or 41 percent 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.

“Moreover, the SSS will soon start the bidding for outsourcing of nine local fund managers who will each manage P1-billion fund,” the SSS said in a statement.

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

 
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