LatinFinance - March/April 2015 - 63
INVESTOR
REPORT
INSTITUTIONAL
INVESTORS
Alternatives
Regional pension funds
and insurers are growing
fond of private equity
investments
PAGE 64
Insurers
The difficulty of finding
yield in the local market
The
yield
question
PAGE 66
Striking the right balance between risk and return is tough for any fund manager. In many
parts of Latin America, local markets are dominated by sovereign debt which, for the most
part, offers little excitement in terms of yield.
At the same time, regulatory changes are rapidly opening up the range of assets that regional pension funds are able to buy. That increases their chances of generating great returns
- but also their risks.
Many are now gradually taking advantage of the new opportunities opening to them under changing rules. With greater regulatory freedom - as well as a deeper familiarity with alternative assets - the region's institutional investors are taking a closer look at private equity.
Fully two-thirds of the region's investors are planning to increase their allocations to the
asset class this year, according to a survey by the Latin American Private Equity and Venture
Capital Association. Nonetheless, the shift is not without its hurdles.
The recent fall of many Latin American currencies against the dollar underscores the
importance of managing foreign exchange risk carefully. For Peruvian insurers, which have
many dollar-denominated policies, the complications are greater.
As Peru's largest insurers explain, juggling the currency requirement while maintaining
strong returns demands deft asset management, and an innovative approach. Pacífico Seguros has used structured notes with currency swaps, while Rímac has invested in long-term
debt from multilaterals that is indexed to the sol.
Brazilian insurers have fewer concerns. Local short-term bonds still provide strong returns
for insurance companies, says BB Seguridade. That means they have little incentive to increase risk by dabbling in other asset classes - until interest rates fall, of course. LF
March/April 2015 - L ATINFINA NCE.COM 63
http://www.LATINFINANCE.COM
LatinFinance - March/April 2015
Table of Contents for the Digital Edition of LatinFinance - March/April 2015
Contents
LatinFinance - March/April 2015 - Cover1
LatinFinance - March/April 2015 - Cover2
LatinFinance - March/April 2015 - Contents
LatinFinance - March/April 2015 - 2
LatinFinance - March/April 2015 - 3
LatinFinance - March/April 2015 - 4
LatinFinance - March/April 2015 - 5
LatinFinance - March/April 2015 - 6
LatinFinance - March/April 2015 - 7
LatinFinance - March/April 2015 - 8
LatinFinance - March/April 2015 - 9
LatinFinance - March/April 2015 - 10
LatinFinance - March/April 2015 - 11
LatinFinance - March/April 2015 - 12
LatinFinance - March/April 2015 - 13
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LatinFinance - March/April 2015 - 15
LatinFinance - March/April 2015 - 16
LatinFinance - March/April 2015 - 17
LatinFinance - March/April 2015 - 18
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LatinFinance - March/April 2015 - 30
LatinFinance - March/April 2015 - 31
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LatinFinance - March/April 2015 - 33
LatinFinance - March/April 2015 - 34
LatinFinance - March/April 2015 - 35
LatinFinance - March/April 2015 - 36
LatinFinance - March/April 2015 - 37
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LatinFinance - March/April 2015 - Cover3
LatinFinance - March/April 2015 - Cover4
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