The assets of Latin American pension funds are becoming increasingly large, but also more international. Some significant data reflecting the scale of this opportunity can be found, for example, in Mexico, where foreign securities represented approximately 15% of the total assets of Afores, which reached $488 billion at the end of 2025.
Even more relevant are the figures from Colombia, where approximately 49% of the assets of mandatory pension portfolios were invested abroad last year; and those from Chile, a country in which 51.7% of the assets of its pension funds are invested abroad; this implies approximately $123.7 billion overseas and $115.6 billion in the domestic market.
This growth translates into a business opportunity for Latin American firms, which clearly see the value in having strong access to UCITS products or even launching vehicles domiciled in Europe. But it is also an opportunity for European firms, which see a way to bring international investors closer to investing in the Latin American local market.
“We see greater demand from pension funds to invest abroad, with the Luxembourg jurisdiction attracting the most interest; and this is a trend that extends across the entire region. This type of institutional investor considers Luxembourg a solid hub, with stable, transparent legislation that is connected to the rest of the world,” recently highlighted Felipe Díaz Toro, Managing Partner at EDN Abogados, during an event organized by the Association of the Luxembourg Fund Industry (Alfi, by its English acronym).
Chile, a bet on modernization
For experts, Chile is a clear example of this trend. On the one hand, it is worth noting that its fund industry has undergone a very significant transformation which, in Díaz’s view, is driving capital markets toward clear modernization and internationalization. “We have a new government, a very professional business environment, and a highly ambitious agenda. The current pension reform will allow for an increase in assets and in the range of investable assets, with a particular focus on private markets. On the other hand, we see that Chilean firms are internationalizing their strategies, thinking not only about local players, but also about European and global players,” explained Díaz.
As a result, Chile already has a significant onshore fund industry, with alternative investments at its core: $37.9 billion in public investment funds (March 2025); and $7.2 billion in assets under management in private investment funds (June 2024), with 27% in private equity, 26% in real estate, and 17% in private debt.
According to Díaz, this new phase generates very interesting business opportunities between Chile and the Luxembourg fund ecosystem: “Opportunities for collaboration are opening up in the presence of Chilean capital in global markets; and also for capital from the rest of the world in the Chilean market. In the first case—when pension funds want to invest in global activities or vehicles—there is increasing use of platforms structured in Luxembourg and UCITS vehicles. In the second case, European structures can provide access to participate in the development of the Chilean market, alongside local agents with all the expertise that entails,” he argued.
The clearest example of this two-way trend is the business of LarrainVial Asset Management. As explained by Camila Guzmán, Portfolio Manager LatAm Equities at the firm, who also participated in the same Alfi event, the shift in the Chilean industry toward managing invested assets locally has built a strong sector with high standards; “now we need vehicles to invest abroad, and Luxembourg has them.”
Currently, its structure in Luxembourg is fairly standard among Latin American asset managers seeking international distribution, as it combines UCITS vehicles domiciled in Luxembourg with delegated functions and a global distribution platform. “We came to this hub because pension funds have very high standards, and here they matched their requirements. We had to ‘climb’ a great mountain at the beginning, but once you achieve it, you obtain this important structure that allows you to compete globally. It was very interesting, because when we had the opportunity to reach offshore institutional investors, that was when we left Chile and tried to diversify our client base. It was a major effort. We began coming to Luxembourg to meet foreign investors in 2016, and at first they were not very receptive to talking about Chile, but this has been changing. Now, the perception is that we are dealing with a relevant country within the global emerging markets universe,” she noted.
She added: “In recent years, we have seen more investments coming from global emerging market funds, and they have done so with more regional managers. That is where we come in as well. We are now one of the largest players in Latin American equities globally, thanks to pension funds, but also to the standards that are established.”
Argentina: potential to be developed
Within the region, Argentina’s fund industry also stands out. As explained by Valentin Galardi, president of the Argentine Chamber of Mutual Funds (CAFCI), the sector faces significant changes that, following Chile’s example, aim to modernize it and open it up to international capital and trust. “For us, it was unimaginable to be in Luxembourg presenting the possibility that 14 funds could be an option for Argentine investors, especially considering that our Mutual Fund Law was created in 1962. However, in 2024 the fund industry in Argentina (mutual funds, FCI) experienced relevant changes in three areas: asset growth, product transformation, and regulatory adjustments linked to the new macroeconomic context,” Galardi shared during his participation in the Alfi event.
In his view, one of the key indicators of where Argentina’s fund industry is heading is the creation of new categories, both of funds and investors. “On the one hand, a new category of funds has been introduced—FCIs for qualified investors—which have fewer investment limits and can invest in more complex assets, international markets, and less liquid structures. Secondly, a new category of funds with international exposure has been created through registered local FCIs, opening an international gateway,” Galardi highlighted as the main changes.
Galardi remains optimistic and confident in the steps the industry is taking, particularly the regulator, toward greater openness. “We have 22 million investors ahead of us; it is a great responsibility.”
