LatinFinance - May/June 2015 - 47

that they have to change something," says
Arturo Rueda, head of Fitch's fund and
asset manager group in Mexico.
The CCD market "has been maturing
at a slower pace than we have hoped for,"
says Ignacio Saldaña, chief investment officer at Afore XXI Banorte, Mexico's largest
pension fund manager.
Saldaña says Afore XXI's assets have
grown between 12% and 15% a year, but
with a lack of new CCDs hitting the market,
the fund has trouble keeping its current allocation in the asset class. All the same, the
fund manager plans to increase its investments in CCDs from about 2.75% to 7.5%
of total assets during the next three years,
and push up its investments in some CCDs
to about 65%, from 30%.
The evolution continues
Luis de Garay, director of brokerage house
GBM's investment bank and corporate
investments, which manages two CCDs,
says now the instruments must become
more "agile".
"They are complex and need a lot of
work. A lot of the discussion is about how
to make them more efficient, and we think
there is a lot of work to do," he continues.
But, "with every new CCD, the financial
technology around these funds gets better,
becoming more like a private equity fund."
Consar, Mexico's pension fund regulator, is reforming codes to make investing
in CCDs easier. "In most developed countries, the pension systems can participate
in private equity. They don't have to jump
through hoops," says Carlos Ramírez, head
of Consar. "They decide what they want to
invest in and they invest in it."
Ramírez says the regulator is working to
separate CCD investing codes from those
of Fibras, Mexico's real estate investment
trusts. It also is streamlining processes for
evaluating CCDs, such as creating a database so fund managers can track CCDs.
"We are changing the rules to give
Afores a little more flexibility and to adapt
best practices," Ramírez says.
Noting that the CCD market "is a very
new thing in Mexico," Galindo of IGS says
he expects CCDs to evolve through the
years. "They will be simpler. Now a CCD
is a public instrument. I think it's going to
become private. But you have to be very
careful because you're talking about funds
from workers and employees. There has
to be very tight regulation so it's not a free
for all."
Indeed, already there are signs of new

LUIS DE GARAY, GBM

"WITH EVERY NEW
CCD, THE FINANCIAL
TECHNOLOGY AROUND
THESE FUNDS GETS
BETTER, BECOMING
MORE LIKE A PRIVATE
EQUITY FUND"

funds are some of the most important
investors in private capital, accounting for
46% of the money in the industry," says Armando Martínez, who oversees investment
research at Discovery Americas, which
operates three CCDs. Investing in private
capital "increases the expected return for
pension fund portfolios without increasing
their aggregated risk," he says.

Getting in early
Mexico's Siefores - the individual funds
managed by the Afores - posted median
returns of 7.42% last year, more than
double 2013's 3.17%. Nevertheless, with
growing assets under management, most
Siefores are looking
for instruments with
Growing popular
CCD investments, and Afores' allocations to structured instruments higher returns.
Saldaña says that
Mexico's Fibras,
6
90
Afores allocations to structured
another instrument
instruments (% of assets
80
invested, left scale)
pension fund man5
agers are allowed
70
to invest in, are not
Total investments in CCDs
4
60
(MXN billion, right scale)
offering the returns
Afore XXI wants. By
50
3
the time real estate
40
reaches the Fibra
market, "it's already
2
30
expensive", Saldaña
20
says, noting Afore XXI
1
10
has the funds to take
earlier-stage risks.
0
0
The Afore XXI
Mar-2008 Mar-2009 Mar-2010 Mar-2011 Mar-2012 Mar-2013 Mar-2014 Mar-2015
team sees more
Source: Banco de México, Consar, LatinFinance
profitability in inNote: Structured instruments include CCDs, Fibras, REITS and debt with income sources
from real assets
vesting in real estate
through a CCD than a
Fibra because CCDs can tap the real estate
types of CCDs in the works. Mexico's largest
market at an earlier stage. Once the CCD
REIT, Fibra Uno, said in March that it would
stabilizes the real estate assets, it sells them
get into the business, creating its own CCD
to a Fibra, typically booking a double-digit
to develop properties. Once that real estate
return, he says.
investment turns a profit, the fund would
Afore Banamex, Mexico's second-largest
sell it to its Fibra business.
pension fund by assets, sees the CCD as a
Fibra Uno is not the first to suggest a
key diversification vehicle. "We can potenmore integrated type of CCD. Afore managtially have instruments with better returns
ers have pondered making their own CCDs
at the medium- and long-term," says Blanas one way around regulation.
cas. "It is a good option that we have used
"We know that more than one Afore
in recent years as a way to look for higher
wants vertical integration and that they
returns."
want their own teams to manage the CCD.
Blancas says that participating in CCDs
But it's not our case," says Saldaña.
is time consuming, because investors have
Rodrigo Blancas, head of mandates at the
to do a lot of analysis. Before investing in a
Afore Banamex, meanwhile, says he thinks
CCD, Blancas says, his team looks over the
these types of CCDs are unlikely to become
fund's project pipeline, the experience of
a reality in the near future.
the CCD team, and its exit strategy. "The
A lot is at stake, not just for Mexico's
CCD market is really dependent on the
pensioners but also the country's infraoffer that the managers bring." LF
structure. "In the rest of the world, pension
May/June 2015 - L ATINFINA NCE.COM 47


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LatinFinance - May/June 2015

Table of Contents for the Digital Edition of LatinFinance - May/June 2015

Contents
LatinFinance - May/June 2015 - Cover1
LatinFinance - May/June 2015 - Cover2
LatinFinance - May/June 2015 - Contents
LatinFinance - May/June 2015 - 2
LatinFinance - May/June 2015 - 3
LatinFinance - May/June 2015 - 4
LatinFinance - May/June 2015 - 5
LatinFinance - May/June 2015 - 6
LatinFinance - May/June 2015 - 7
LatinFinance - May/June 2015 - 8
LatinFinance - May/June 2015 - 9
LatinFinance - May/June 2015 - 10
LatinFinance - May/June 2015 - 11
LatinFinance - May/June 2015 - 12
LatinFinance - May/June 2015 - 13
LatinFinance - May/June 2015 - 14
LatinFinance - May/June 2015 - 15
LatinFinance - May/June 2015 - 16
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LatinFinance - May/June 2015 - 18
LatinFinance - May/June 2015 - 19
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LatinFinance - May/June 2015 - 21
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LatinFinance - May/June 2015 - Cover3
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