LatinFinance - May/June 2014 - 41

chief investment officer at XXi-Banorte.
"they have been flexible, and they have
adapted as needed."
XXi-Banorte uses its investment
diversification options as much as it can,
particularly as bond prices fall in response
to rising US treasury yields, Saldaña says.
the fund takes a close interest in mexico's
infrastructure projects, for example. "the
worries about the fixed income market have
drawn us to participate more aggressively in
other asset classes," he says.
In search of returns
a point of contention is the pension funds'
20% limit for offshore investments. Saldaña
says he'd like that cap raised to as much as
40%. it's a concern that the regulator also
feels.
"We have a fast-growing pension system
that doesn't find enough alternatives to
invest within the mexican financial system
and has a cap of 20% abroad," says carlos
Ramírez, head of the pensions regulator,
consar. While his organization - and the
pension funds themselves - would like a
higher cap on international investments,
there is political push-back.
"a lot of legislators believe that investing
the money of the mexican workers abroad
is not a good idea," Ramírez explains. "Here
at consar we're absolutely convinced that
we have to change that limit. Hopefully we'll
be able to take a shot at that limit probably
by the end of next year - but it's not going to
be in the short term."
mexico's congress is debating a social
security bill that is set to overhaul more
than 50 aspects of the pensions law,
including corporate governance and

Branching out
Investment mandates agreed by Afores
Manager

Mandate type

International manager

Banamex

Global equities

Schroders ($400m), JPMorgan, BlackRock
( to be funded)

European equities

Schroders ($470m), Pioneer (close to being
funded), FranklinTempleton, BlackRock, BNP
Paribas (to be funded)

Profuturo

Approval for third-party mandates

XXI Banorte

European equities

BlackRock, Schroders ($900m)

Source: Consar, LatinFinance

fees. Ramírez says the legislation is
comprehensive, with the exception of
two major elements: increasing offshore
allocations and the amount that mexican
workers must contribute.
"Regardless of the other 54 articles,
which are very important, if we don't
increase the mandatory contribution

and we don't change the 20% limit, we're
basically condemning mexican savers to
low pensions.
"our job is to look after the mXn2 billion
that is the property of 50 million mexicans.
at the end of the day, our main goal is to
increase their pensions. if we don't touch
those two issues, we won't be able to do
that."
Still, the afores have plenty of room to
allocate mandates, he says. in aggregate,
the pension funds are approaching the 20%
offshore limit, with 16.2% in international
stocks and 1.5% of their portfolios in bonds
outside mexico. But much of that is selfinvested, meaning they could switch some
holdings for third party mandates.
"mandates are very interesting vehicles
for the afores to use on a much more
regular, deeper way in the years ahead,"
he says. "it has the advantage of providing
the mexican workers, the savers, with the
possibility of having exposure to a broad
diversity of companies. at the end of the
day, what we're looking for in the mexican
pension system is broader diversification
and higher returns." LF

CARLOS RAMIREZ
CONSAR

"WE HAVE A
FAST-GROWING
PENSION SYSTEM
THAT DOESN'T
FIND ENOUGH
ALTERNATIVES TO
INVEST IN MEXICO
AND A CAP OF 20%
ABROAD"

Global view
Allocations and returns of Mexico's largest pension funds
Investment allocations (%)
Manager

Fund

XXI Banorte

Basic 2

XXI Banorte

Basic 3

12.69

51.5

17.8

XXI Banorte

Basic 4

10.68

45.9

15.9

Banamex

Basic 4

9.35

45.3

12.9

Returns (%)

Assets
($ bn)

Treasury
bills

Corporate
debt (local)

Equity
(local)

Equity
(int'l)

International
debt

1 year

5 yrs
(cumulative)

14.44

55.2

18.4

7.6

14.9

1.7

-0.76

8.55

9.1

17.2

1.8

-1.23

9.25

11.4

23.1

1.6

-1.52

10.06

8.5

25.7

0.6

1.34

11.41

Banamex

Basic 3

8.78

47.7

16.3

7.3

19.8

0.9

0.95

9.85

SURA

Basic 3

8.53

47.3

19.9

6.9

16.7

1.9

2.18

10.88

Banamex

Basic 2

7.82

49.5

20.4

5.7

17

1

0.99

8.89

SURA

Basic 2

7.29

51.1

21

5.6

14.5

2.1

2.37

9.67

Profuturo GNP

Basic 3

6.84

41.9

24.9

6.1

19.6

2.9

0.5

9.59

Profuturo GNP

Basic 2

6.69

45

27.4

5.1

17

2.6

0.7

9

Source: Consar, data to March 2014

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