Pag-IBIG to invest P5B in stocks

HOME Development Mutual Fund (Pag-IBIG) is setting aside P5 billion for its maiden investment in equities, an official said last Thursday.

“I’ve just gotten approval [from the board of trustees] to invest a certain percentage of our investable funds into equities,” Pag-IBIG Chief Executive Officer Darlene Marie B. Berberabe told reporters at the sidelines of the Asia CEO Awards.

Ms. Berberabe, who was given the Public Sector Leadership Award, said Pag-IBIG currently holds P330 billion in assets, with about 70% of these invested in housing-related loans.

It also has P35 billion in “free funds” for other investments -- 85% of which are in government securities, while the rest are in fixed-income assets.

“We have approval for a maximum of P5 billion to be invested in equities,” she said.

Pag-IBIG has begun screening fund managers to help the state-run agency with the investment.

“That’s what we are doing now, we are accrediting fund managers because we recognize that we don’t have that capacity. This is a first for us,” Ms. Berberabe said.

She said fund managers would be chosen based on their track record and the management fees they offer.

“We really want to be safe. This is money that members will need at a certain point. We need to return them to our members.”

While no specific timetable has been set, Pag-IBIG’s first investment in stocks will likely happen next year, she said.

Earlier this year, two other state-run financial institutions, the Government Service Insurance System and Social Security System, said they were planning to increase their exposure to equities to take advantage of attractive valuations, especially with the Philippine economy booming.

Pag-IBIG’s foray into stocks is expected to add liquidity to the local market, which is bracing for volatility should the US Federal Reserve start reducing its massive stimulus program next year.

Last year, the Philippine Stock Exchange (PSE) emerged as the third best performing bourse in the world after Turkey and Thailand.

Despite volatility this year due to concerns over the Fed’s taper plans, the benchmark index has still gained 7.83% to date. It settled at 6,267.85 points yesterday against the 2012 yearend close of 5,812.73.

Before the US central bank said it would taper its $85-billion monthly bond-buying program and sent tremors across financial markets worldwide, the PSE index hit as high as 7,392.20 on May 15 -- a gain of 27.17% for the year.

source:  Businessworld