Until now, Afores could invest abroad through three vehicles: ETFs, Indexed Mutual Funds and Investment Mandates, but, seeking to offer more investment alternatives, as well as granting them with greater flexibility and better defense tools against volatility cycles, the Mexican Pension Regulator, the CONSAR, decided, among other things, to include Mutual Funds with active strategies as an additional investment vehicle.
Afore Citibanamex, the Afore with most funded mandates, told Funds Society: “At Afore Citibanamex we see as positive any release of restrictions on the Afores investment process… We believe that the experience we have acquired over the years in active investments will be very useful to take advantage of the opportunities in mutual funds that this change in regulation represents. We will be looking forward to hearing about the specific details of this regulatory change in order to take advantage of them for the benefit of our affiliated workers.”
“At Afore SURA we will be attentive to the Consar details of the process to be followed as well as the eligibility and regulation criteria that will allow the Afores to invest in international mutual funds,” said Luis de la Cerda, director of Investments.
Gustavo Lozano, who leads Amundi Pioneer’s efforts in Mexico, Central America and the Caribbean, mentions that “international funds will give pension administrators access to active management strategies they did not have to before. This will be especially important the following years in which the timely selection of stocks and assets will be key, however, we do not see any of the options as excluding: Mandates, ETF or Funds, since these will give Afores the possibility to have different levels of exposure to international markets with different investment horizons and different strategic asset allocation profiles”.
Regarding the eligibility of strategies and managers, Lozano added: “What we have seen from the projects that are being proposed for the implementation of this, is that the selection criteria for managers and strategies that could be offered in Mexico, should be quite in line with what is currently being demanded of investment managers in Mexico, regarding mandates. We also believe that the reporting requirements will be strict but achievable, giving the regulator the visibility and timely follow-up that currently applies to the pension industry. “
According to Mauricio Giordano, Country Manager of Natixis IM Mexico, these changes are positive for the sector and allow the Afores smaller exposures that they did not get before. In addition, it allows all Afores to complement their diversification strategies and achieve tactical positions to take advantage of the global situation. However, he believes that the afores will continue to seek to implement mandates for their long-term positions: “Afores continue to see this partnership with a long-term manager in which knowledge transfer and reporting are key, as very important for strategic positions”. The executive points out that there are still pending “CAR guidelines in this regard, it should be at the end of February or March when we could have the final rules and restrictions,” he concludes.