Manila Makes Money on Masterpieces

Manila -- Robert Vergara, head of the Government Service Insurance System, is keen to shore up returns at the Philippines’ biggest state pension fund, as bond yields slump, is considering selling paintings hanging at the national museum.

Art collectors of ArtKabinett social media network are always sad when a public collection gets cashed in to satisfy debt.

GSIS has proposed putting around 100 works by Philippine artists including Juan Luna and Fernando Amorsolo up for sale over the coming 10 years as local consumers become more wealthy, Vergara said in a recent interview.

The $20 billion fund targets returns of at least 8.5 percent to meet obligations to the 1.4 million workers whose savings it manages, and has generated between 9 and 12 percent over the last three years, he said.

“We do believe that art is best left to collectors as opposed to a pension fund,” he said. “The collection is not something that generates a return on its own.”

Filipino President, Benigno Aquino's, efforts to cut budget deficits and curb corruption have won four credit-rating upgrades from Standard & Poor’s since he took power in June 2010, prompting an almost halving of sovereign bond yields.

GSIS, which has 45 percent of its assets invested in debt, is increasing returns by boosting equity holdings, investing in railways, selling some real estate and farming out cash to top-performing funds.

‘Parisian Life’

The most valuable painting in the national collection is ‘The Parisian Life,’ shown here -- a 1892 oil on canvas by Juan Luna that the fund bought for 46 million pesos ($1 million) in 2002, according to the GSIS website.

It is probably worth around 60 million pesos, according to Regina Mercedes Cruz, a curator at Bangko Sentral ng Pilipinas Museum in Manila.

The paring of the state-owned art collection will take into account more than just price as the collection is “part of our cultural identity,” Vergara said.

Luna's Legacy

Juan Luna y Novicio (October 23, 1857 – December 7, 1899) was a Filipino painter, sculptor and a political activist of the Philippine Revolution during the late 19th century. He became one of the first internationally recognized Philippine artists.

His winning the gold medal in the 1884 Madrid Exposition of Fine Arts, along with the silver win of fellow Filipino painter Félix Resurrección Hidalgo, prompted a celebration which was a major highlight in the memoirs of members of the Propaganda Movement, with the fellow Ilustrados toasting to the two painters' good health and to the brotherhood between Spain and the Philippines.

Regarded for work done in the manner of the Spanish, Italian and French academies of his time, Luna painted literary and historical scenes, some with an underscore of political commentary.

GSIS Assets

Some 28 percent of GSIS assets under management consist of loans to members, 17 percent is in stocks and the remaining 10 percent includes categories like property and art, said Vergara, who was appointed by Aquino in 2010 and previously worked as a fund manager at Morgan Stanley Asia Ltd.

The Philippine economy has expanded by more than 6 percent in all but one of the 10 quarters through June, official data show. The growing affluence in the country makes it a good time to sell the paintings, Vergara said.

Vergara said he aims to raise the portion of the portfolio invested in equities from around 17 percent to 20 percent to take advantage of the local stock market’s strong performance.

Today's homepage Featured Art Video highlights the importance of Juan Luna to Filipino heritage. http://www.youtube.com/watch?v=OwheyGZGI_c&sns=em