As explained by Ignacio Saldaña, Afore XXI Banorte’s CIO, during an interview with El Financiero TV picked up by Funds Society, Afore XXI Banorte is about to fund its equities mandate, something they wanted to do in the month of September, but which will most likely be delayed until the end of the year.
Saldaña explained that, in this regard, they are working with both managers and with its custodian, State Street, in order to achieve it. Afore XXI awarded the European equities mandate, to Schroders and BlackRock, last January. These management companies will receive 1.75% of the assets under administration, which according to Consar’s figures from last December amount to 9,632 million pesos (US$725 million).
“We are working closely with the two management firms so that we can be ready in due time and proper form to fund the two equity mandates before closing this year,” he said.
Saldaña also referred to the commodities mandate, a mandate for which they applied to eight mandataries, including four which have already been shortlisted, but which he preferred not to disclose at this stage. 3% of assets managed by the afore go to this mandate, a volume for which they will need at least two asset managers. In a couple of months they should be finished with the selection process and will announce the names of the selected asset managers.
Afore XXI Banorte manages 25.9% of the total resources of the afores, ranking it as the largest afore by volume in the market.
Saldaña also referred to Consar’s role and to how the regulator has increased the afores’ investment capacity in foreign instruments.
As to whether they believe Consar will make modifications to the investment regime and where they would like to see these changes, Saldaña highlighted that the regulator has continued to make changes to the regime. “Our system has expanded constantly. The portfolios are acquiring quite a substantial size as a percentage of our domestic product and the size of our market,” he added, while stressing that hence the importance of a growing portfolio diversification.
Therefore, he said, it is becoming increasingly difficult to manage such portfolios which also grow globally. “We believe that the authority will continue to expand the diversity in this regard,” he said. “Bit by bit we gradually increase the diversification of our portfolios, which is essential for when things get complicated.”
Afore XXI’s Investment Committee has approved to have 9% of its assets under mandate, which currently represents about US$4.05 billion by the end of 2015. In this sense, the manager stressed that the key is to “increase the diversification of portfolios to sail ahead in difficult times.”
As for his plans for higher yields in an environment of low rates, Saldaña reiterated that the key is “to continue to diversify our portfolios” and recalled that when the current system started, it was launched with a single bond fund, which led the way to a second fund with some equity, until they gradually evolved to four funds.
“The regulatory authority has been expanding the investment regime and the way of obtaining higher yields is to maximize our investment regime, which is one of the plans which always exists in Afore XXI Banorte. Our focus is on increasing investment mandates with foreign managers. The afores have to participate in the reform environment which the country is experiencing. We cannot be left aside and we must find a way to get into power projects, infrastructure, and technology. We have to find a way to capitalize so that the savings of Mexican citizens may benefit,” said Saldaña.