The Swiss banking group SYZ & CO is moving into the Latin American institutional markets with the registration in Chile of the OYSTER European Opportunities fund. The clientele being targeted is mainly local pension funds, a fast- developing category of investors in the Andean region.
The assets of these pension funds are experiencing strong growth and should reach $800 billion by the end of 2013, of which an estimated $250 billion is potentially earmarked for international investments. The estimated growth for these pension funds exceeds 50% expected by 2016 with contributions running at nearly $2 billion per month. In Chile, for example, the assets in pension funds already amount to $170 billion, or 63% of GDP.
In order for the OYSTER funds to be distributed to pension fund administrators, SYZ & CO has entered into an agreement with HMC, a Chilean specialist in institutional distribution in the Andean markets.
Fast-developing pension funds
Apart from their swift growth, these pension funds also stand out in terms of their great openness to international investments. Chilean funds are, for example, allowed to invest up to 80% of their assets abroad. The total volume of investments that are possible abroad for the whole of Latin America therefore amounts to a potential nearly USD 250 billion, or more than 30% of the total. After having invested locally or in the North American markets, the region’s pension fund institutions are now showing an increased appetite for Europe, which offers some attractive prospects thanks to its lower share valuation levels and the diversification it allows, notably in terms of currencies.
A first OYSTER fund registered in Chile
SYZ & CO’s first fund to be registered in Chile is its flagship European equities fund, OYSTER European Opportunities. A second European corporate bonds fund should follow shortly, in order to satisfy Chilean pension funds’ appetite for fixed-income investments in euros.
A specialized local partner
In order for the OYSTER funds to be distributed to pension fund managers (PFMs), SYZ & CO has joined forces with HMC Partners, a local specialist in institutional distribution in the Andean markets. Established in Santiago (Chile) in 2009, HMC is also present in Colombia and Peru, two markets that are also very promising for institutional management. In Brazil, HMC has linked up with Itajubá, a company that distributes funds to a Sao Paulo-based institutional clientele. The cooperation with SYZ & CO is managed by Ricardo Morales, Managing Partner and co-founder of HMC.