MANILA, Philippines--As capital markets here and abroad remain volatile, the Government Service Insurance System is still planning to invest another $400 million abroad.

In a press briefing, GSIS president and general manager Winston Garcia said his office was now looking for fund managers to assist it in efforts to engage in foreign currency-denominated investments.

Garcia said the plan to place more money abroad was consistent with the strategy of GSIS to diversify its investment portfolio. "In a diversified market, you will be able to control volatility," he told reporters last week.

GSIS will accept applications from potential fund managers in August and will have likely come up with its choice by September.

Investing another $400 million in foreign assets is the second tranche of the GSIS program of putting about $1 billion of its funds offshore. Earlier, GSIS already invested $600 million in various assets denominated in foreign currencies.

ING Investment Management and Credit Agricole Asset Management Singapore were chosen as fund managers for the first investment activity. Citibank N.A. was tapped as global custodian.

The initiative to invest outside the country was prompted by the excess liquidity of the GSIS and its heavy exposure in the local capital market, Garcia said. GSIS has substantial investments in Philippine fixed-income securities and in blue-chip stocks.

While capital market outlook worldwide is relatively bleak this year, Garcia said the GSIS was not concerned because it has been a long-term investor. He added that offshore investments still performed relatively better than local funds or stocks even in times of uncertainty.

"Equity prices here have gone down 30 percent. But [value of] our existing investments abroad have only dropped by one percent. Despite the drop, we are still earning because of forex [foreign exchange] gains," he said.

The banks handling the existing investments of GSIS in foreign assets were assigned the target of making the money earn at least 8 percent a year over the long term. Despite unfavorable market conditions so far this year, Garcia said GSIS was confident of earning the desired profit.

Foreign capital markets have been weighed down by the lingering effects of the subprime market woes in the United States and surging crude oil prices.

The local scenario is not much different, with inflation hitting double-digit levels and overall economic growth slowing down.

But Garcia said the current economic problems were a concern more for short-term rather than long-term investors like the GSIS.

Besides investing in foreign portfolio assets, Garcia said the GSIS was still willing to invest more locally.

He reiterated the interest of the GSIS to buy the estimated 100-hectare property owned by the national government through Food Terminals Inc. in Taguig City. GSIS plans to develop it into a commercial area.