MANILA - The Social Security System (SSS) of the Philippines has taken significant steps to enhance its investment portfolio by engaging with local fund managers for the management of its Investment Reserve Fund (IRF). As part of a strategy initiated in 2016 to diversify its investible funds, SSS has now awarded a total of P8 billion in segregated investment mandates to five domestic fund managers.
The latest development saw SSS engage the Land Bank of the Philippines (LBP-TBG) and the Development Bank of the Philippines (DBP-TBG) on Thursday to oversee P2 billion in investible funds specifically earmarked for Pure Fixed Income investments. Each bank had previously received P1 billion in two tranches earlier in October. This move is in line with the provisions of Republic Act No. 11199, also known as the Social Security Act of 2018, which allows SSS to appoint both local and foreign fund managers to handle portions of its IRF.
The selection process emphasizes the expertise and ability to manage risk parameters effectively. Earlier in 2023, SSS chose Bank of the Philippine Islands Asset Management and Trust Corp., along with Security Bank Corp.-Trust and Asset Management, for their proficiency in managing fixed income investments, entrusting them with P2 billion funds.
This strategic initiative is designed to leverage external fund managers' specialized knowledge, especially in frontier markets where SSS may not have a competitive advantage. By broadening their investment approach, SSS aims to optimize returns and strengthen the financial stability of its reserve fund, ultimately benefitting its members through improved pension fund management.
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