MANILA -- The Government Service Insurance System reported on Sunday that its investments in foreign stocks and securities gained 5 percent, or P1.25 billion, since it shifted a big chunk of its total investment portfolio overseas five months ago.

The GSIS, however, did not identify the foreign stocks and securities where it invested the contributions of government employees.

Over the past months, stocks and securities worldwide have fallen sharply because of the US financial crisis.

GSIS president Winston Garcia, nevertheless, said the investment gain was made in the face of the US financial meltdown. It has even emboldened the pension fund to invest the remaining $400 million of its $1-billion Global Investment Program (GIP) in the coming weeks, he said.

“The proof of the pudding is in the eating. This is a significant achievement. This is why I always tell our critics not to fall prey to knee-jerk reactions. We have a three-year window for the GIP. Based on the early results, I can assure our members that we are headed in the right direction,” he said.

But Sen. Francis Escudero, who had demanded proof of the true state of GSIS investments, was not impressed.

“That simplistic answer is simply not acceptable. If that is true, why are teachers complaining to me all over the country that their benefits are getting delayed and the answer being given them are mere runarounds?” Escudero said in a text message.

Except for the supposed gain from the $600 million it invested in April, the GSIS did not say where the gain as of Sept. 30 came from.

“The GSIS investments under the GIP are fully diversified, not only geographically but also in terms of asset class, thus hedging it from the effects of the current US market collapse,” Garcia said.

Escudero, chair of the Senate ways and means committee, was unhappy with Garcia’s “general statements” on the health of the GSIS’ foreign investments.

“If they are not hiding anything and indeed the funds are safe, come out with the proof and let the public know the details of the investments made by these fund managers. Is the GSIS even aware of the investment strategy adopted by these fund managers and the corresponding asset selection and instrument selection they have made on behalf of the GSIS?”’ Escudero said.

But Garcia urged his critics and GSIS members to be more patient with the pension fund’s decision to take its money overseas.

“The absorptive capacity of the local market is just too limited for the investible funds of the GSIS. Thus, we have to take advantage of opportunities overseas. When things go bad, we should not press the panic button immediately. We’re in for the long haul. Any educated judgment on the performance of the investment should be rendered at the end of the program, not a few months into it. That’s why it’s called long-term investments,” Garcia said.

He said that the GIP required its fund managers to generate no less than 8 percent in annual returns net of fees on its investments and a 7-percent cap on portfolio volatility.

Despite doubts about the GSIS decision to invest abroad, Garcia said the past few weeks reinforced the soundness of the pension fund’s global diversification strategy.

“The model that we have for the GIP has been able to withstand the turmoil. Compared with our investments here in the country, the performance of the global investments is a lot better,” Garcia said.

He said the GSIS would proceed with the GIP’s second stage, but this time it would look at the fund managers’ exposure to the US market and their asset-backed or mortgaged-backed investments.

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