Pag-IBIG plans P5B stock market investment

MANILA, Philippines—Who says only the private sector should diversify?

Government-run Home Development Mutual Fund, also known as Pag-IBIG Fund, is seeking to spread out its investment portfolio to include the stock market for the first time through a “maximum” P5-billion investment, its top official said.

Pag-IBIG is currently seeking out fund managers for its initial foray at the stock market, which the board of the fund had just approved, Pag-IBIG CEO Darlene Marie Berberabe told reporters in an interview.

“We are now accrediting fund managers. This is a first for us,” Berberabe said.

She said the decision was to “principally diversify [the fund’s] investment.”

“We are also a savings program and we hope to invest the cash that is not part of the housing investment in equities. The ultimate objective is to give good yield for our Pag-IBIG savers,” she added.

Like most institutional portfolios, a large part of Pag-IBIG’s investment is parked in fixed-income securities and government securities, regarded as safer but lower yielding investments.

Pag-IBIG’s investment portfolio amounts to about P35 billion, of which 85 percent are placed in government securities, Berberabe said. That is just a part of the total assets of Pag-IBIG, which she said amounted to P330 billion, with 70 percent invested in housing.

The decision comes as the country’s main Philippine Stock Exchange Index continues to suffer from volatile trading amid concerns that the United States Federal Reserve would slow down the monetary stimulus program.

The PSEi is still up about 7.8 percent so far this year, but this has come down from a gain of about 27 percent recorded in the first half of the year.

Brokers like Joseph Roxas, president of Eagle Equities Inc., welcomed the move by Pag-IBIG, noting that any liquidity bump would be good for the domestic market.

Fund managers are likewise keen on bagging managing rights to a relatively large sum of money.

Berberabe noted that Pag-IBIG would evaluate mainly local fund managers and would look at typical measures, such as management fees and track records.

Other concerns, such as whether Pag-IBIG would invest only in local equities or include foreign stocks as part of its basket, have yet to be finalized, Berberabe said.