Last updated: 05:37 / Friday, 12 February 2021
Column by Arturo Hanono

Speaking of Investments, Which Afores Stand Out?

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Speaking of Investments, Which Afores Stand Out?

To be the best Afore in terms of yields, they have to be good in several asset classes and that allows them to diversify the portfolios. The 4 most profitable Afores for the period 2012-2018 in order of importance are: Profuturo, Coppel, Sura and Citibanamex.

The 10 Afores that exist in Mexico, manage 180 billion dollars that represent 15% of Mexico's GDP.

The 4 most profitable Afores are characterized by having between 8 and 9 asset classes in which they stand out from a total of 19 assets in which they invest in accordance with CONSAR (page 4).

Afore Profuturo that presents the best weighted performance of its Siefores had 7.60% between December 2012 and July 2018. It stood out for its performance attribution in foreign equity; mexican TIP´s (Udibonos); corporates; mexican treasurye bills (Cetes); foreign debt; Brems and Bondes D; derivatives and other underlying assets, as well as amortization and trading. The specialization that Afore Profuturo has in these asset classes allows it to differentiate itself and stand out among the 10 Afores that exist today. It is important to mention that these asset classes generate value for their portfolios in different weightings as can be seen in the following table:

Afore Coppel is in the second position with a yield of 7.19%, highlighting in its performance attribution in: foreign equity; mexican TIP´s (Udibonos); corporate bonds; local equity; repo; securitized; Brems and Bondes D; derivatives and other underlying assets, as well as amortization and trading.

CONSAR identifies 19 asset classes in its performance attribution report that in order of importance for its contribution to performance are:

  1. Foreign equity (5 Afores stand out for their results in this asset class)
  2. Mexican TIP´s, Udibonos (4)
  3. Corporates (5)
  4. M Bonos (5)
  5. Local equity (4)
  6. Mandates (2)
  7. Mexican treasury bill, Cetes (4)
  8. Structured (5)
  9. UMS (2)
  10. Repo (7)
  11. Securitized (3)
  12. Foreign debt (3)
  13. Brems and Bondes D (4)
  14. Bondes 182 y BPAs (2)
  15. Commodities (1)
  16. IPAB (3)
  17. Mexican REITS, fibras (1)
  18. Derivates and others underlying (2)
  19. Amortization and trading (8)

These 19 asset classes, the first 4 asset classes account for 85% of the performance of the system, however it is not enough to be good at these asset classes to be the best in returns.

The asset with the highest profitability has been the foreign equity (36% of the weighted yield) which has a limit of 20%. The following three assets are: Mexican TIP´s (Udibonos); corporates and M bonds that each contributed between 16 and 17% to average yield of all the Afore.

It is interesting to note the case of Afore PensiónISSSTE who is good in 7 asset classes and is in 5th place in terms of returns, so seeking to improve their results in one or two more asset classes would help improve their results. In a similar situation is Afore Azteca who is good in 5 asset classes and is in 6th place in yields.

Afore Inbursa is good in 7 asset classes but it is not enough to be placed in the first places since the asset classes in which it is good are not those that provide the highest returns.

The investment teams of the Afores should be strengthened and sophisticated to improve their specialization in the different asset classes to maintain and attract affiliated workers.

Column by Arturo Hanono

About Arturo Hanono

Arturo Hanono is Senior Advisor in Mexico at Alpine Capital Advisors, firm specialized in global private equity advisory. With over 35 years of asset management experience in Mexico, Arturo supports all of Alpine’s fundraising and investor relations efforts in Mexico. Prior to joining Alpine, Arturo held the CIO position at various Mexican pension funds. Arturo is currently an investment committee member of several companies. He holds a degree in Economics from Universidad Anahuac. He won first place in the National Securities Market Prize organized by the Mexican Stock Exchange (BMV) with his professional thesis in 1985. You can find him at arturo@alpineca.com
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