The Social Security System (SSS) tapped the Land Bank of the Philippines (LBP) and the Development Bank of the Philippines (DBP) as its new local fund managers to enhance the return on investment (ROI) from its investment portfolio for the next three years.
SSS President and Chief Executive Officer Rolando Ledesma Macasaet announced that LBP-Trust Banking Group (LBP-TBG) and DBP-Trust Banking Group (DBP-TBG) will manage the P2 billion worth of investible funds for Pure Fixed Income starting October 2023.
LBP-TBG and DBP-TBG received P1 billion in investment funds each, which they got in two tranches last October 13 and 17. They will manage the funds within specific risk parameters for three years to expand the SSS investment portfolio and generate more earnings.
“We see that SSS will greatly benefit from tapping external fund managers to manage a portion of our investible funds. We can take advantage of their expertise to help grow the SSS funds and diversify the investment portfolio,” Macasaet said.
LBP-TBG and DBP-TBG will complement the other fund managers hired to manage Pure Fixed Income investibles. Earlier this year, SSS tapped Bank of the Philippine Islands (BPI) Asset Management and Trust Corporation, and Security Bank Corporation-Trust and Asset Management to handle P2 billion funds allocated for Pure Fixed Income investments.
SSS Executive Vice President for Investments Sector Rizaldy T. Capulong said that under Republic Act No. 11199 or the Social Security Act of 2018, SSS can appoint local or foreign fund managers to handle its Investment Reserve Fund (IRF). IRF is a portion of the SSS Reserve Fund allocated for investments wherein income derived from it goes back to the reserve fund and helps it grow.
Hiring qualified local fund managers has been part of SSS’ investment strategy since 2016. “Tapping more investment savvy fund managers is a best practice worldwide, particularly with pension funds. This strategy allows pension funds like SSS to access the expertise of fund managers in frontier markets where they do not have a competitive advantage like foreign investments,” SSS Senior Vice President for Fund Management Group Ernesto D. Francisco, Jr. explained.
To date, SSS has already awarded the management of seven segregated investment mandates for Pure Fixed Income Fund, Balanced Fund, and Pure Equity Fund worth P8 billion to five local fund managers.
