While Chile has long been the center of Latin American asset-gathering activity for international money managers, the country’s locally-domiciled mutual funds, pension funds, life insurers and corporate pension plans are operating in an increasingly complex and sophisticated environment that requires a renewed look at this dynamic marketplace. On September 6, 2012, Latin Asset Management and Fund Pro Performance will host the Seminar on Asset Management in Chile, which will bring together local institutional investors, international fund managers and regulators to discuss local-market issues, global asset allocation strategies, and regional product, regulatory and distribution trends. Also during the Seminar, the staff of Fund Pro Performance will present Platinum Performance Awards to Chile’s best mutual funds and fund managers, and for the second time present the country's top AFP pension managers with awards for best performance as well. The event is certain to once again attract Chile's leading institutional players and international experts alike..
Purpose of the seminar
The Seminar is intended to address the next phase of growth for the asset management business in Chile, as well as the opportunities that will emerge from it. As always, the overall goal of Latin Asset Management and Fund Pro Performance is to help stimulate debate and work toward the development of a robust, thriving asset management business by examining the barriers typically faced by fund management industries in emerging markets across the globe.
The marketplace
Chile is best known for its pioneering private pension system, created nearly 30 years ago. The system consists of private fund managers known as AFPs, which have amassed assets of US$150 billion across a spectrum of variable-risk funds, a near doubling of the AUMs since the end of 2008. Increased investment flexibility has been bestowed on the AFPs in recent months, at the same time that their strategies have come under scrutiny as a result of the global market turmoil. Meanwhile, the mutual fund industry has also flourished, taking advantage of a strong decade of wealth generation.
Local managers have launched funds of every flavor, from capital-protected vehicles to international sector funds. Some new, high-profile foreign entrants to this market have shaken things up, leading to more intense competition for client assets. Life insurers have also been active, showing a strong interest in the voluntary retirement savings (APV) products, similar to IRAs in the US. All three industries are focused intently on the recently launched corporate pension (APVC) market, in which AFPs, fund managers and insurers for the first time have incentives to offer supplementary retirement solutions to local industry.
Cross-border investments
Chile’s institutional investors are far ahead of their Latin American neighbors when it comes to allocations to cross-border managers and mutual funds. Private pension managers, mutual fund managers and insurers invest more than US$20 billion in offshore vehicles, and projections indicate that this figure will grow exponentially in coming years. While most are familiar with the AFP market, it’s important to note that most mutual funds and insurers rely on a fund-of-funds structure when seeking international exposure, and these institutional investors have been increasingly significant buyers of cross-border funds.
The AFPs themselves will no doubt remain far ahead of their peers in terms of international allocations, given the demands on the managers to invest heavily in equities on behalf of younger workers, in order to ensure that future pensioners can maintain a decent standard of living. Separately, Chile’s bolsa offshore is also in the news lately, as ING Chile plans to list its parent’s Luxembourg domiciled funds on the exchange, granting the funds public-offering status throughout Chile and enabling them to be marketed openly to all Chileans. This model is being eyed by other managers as a gateway into this stable, secure and prosperous country. |
