Investors who highly concentrate their investments into one particular asset class greatly increase the risk and volatility of their investment returns. It makes sense that Enriquez would wish to do so. He says the company had challenges meeting yield targets of close to 5% as local interest rates reached all-time lows last year. Enriquez confirmed that Sun Life continues to manage all assets internally. The remaining 5% is in domestic equities. Today, as then, 95% of the firm's assets remain invested in local currency fixed income, primarily government bonds. The company is eyeing dollar-denominated debt and equity in the US and Europe, as well as potential investments into Asian markets in which the group has a presence, and which are therefore more familiar.Įnriquez, who also heads investments at Sun Life Philippines' asset management business, told AsianInvestor that its asset allocation had not changed since the publication spoke with then-chief executive Rizalina Mantaring in 2016. “Offshore would definitely be something that we're looking at,” says Enriquez. Enriquez expects the Foreign Currency Denominated Instruments (FCDI) circular to take effect immediately upon release, allowing life insurers to invest offshore. Sun Life would be among the first to take advantage of this, if it passes. That could well change, as a new circular from the government that is expected by the third quarter of this year seeks to change the rules to let investors back peso liabilities with back dollar assets. “Obviously the bulk of our liabilities are peso, so we're forced to just be within the Philippines in terms of looking for assets,” he says. “We’re barred from buying dollar-denominated assets to back peso liabilities, even if we can hedge it,” explains Enriquez. This is due to regulations covering the life insurers, which prevent them from making investments in foreign currency assets. However, its asset allocation has not changed in the last five years and remains highly concentrated in local-currency fixed income. Sun Life Philippines has seen its assets grow from Ps195.87 billion in 2016 to Ps274 billion ($5.7 billion) at the end of December 2020. The Canadian life insurer’s Philippines entity is eager to expand its array of investments, particularly offshore, following decent asset growth in recent years.
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