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Chile approves first AFP alts managers in landmark move

Chile approves first AFP alts managers in landmark move

The Carlyle Group, Oaktree Capital Management and Intermediate Capital Group (ICG) have become the first international alternative asset managers approved for investment by Chilean AFPs following a wide-ranging reform to boost access to the asset class.

Chile's new rules, which came into effect November 1, required the country's pension regulator, the Comisión Clasificadora de Riesgo (CCR), to review and green light the international alternatives managers the pension funds can use.

The CCR named the first batch of approved managers in report published December 23, allowing the AFPs to invest in funds from specific sub-asset classes from each group.

For the US-based $174 billion Carlyle and $100 billion Oaktree, the CCR allowed AFPs to buy into private equity, private debt and real estate vehicles.

Meanwhile, the pension funds can invest in private debt vehicles from the €24 billion ($28.6 billion) UK-based ICG, according to the report.

Chile's reform increased the AFPs access to alternative assets as they chase higher returns amid complaints from savers that they aren't receiving adequate pensions.

Before the reform, alternatives counted toward the investment limit of assets such as equities with AFPs only able to invest in them through feeder funds. Now they are able to invest directly in alternatives products, on the condition the risk regulator approve the international alternatives managers and their funds beforehand.

The approval of Carlyle, Oaktree and ICG mark a step forward for AFPs push to increase their investments in alternatives. However, hurdles remain as the pension funds must create their own guidelines to invest in alternatives which the country's pension regulator must subsequently approve.

Due to these pending measures, industry members told Citywire Americas in late November they don't expect fresh investment in alternatives until at least March or April.  

Other new funds

The CCR also approved eight traditional mutual funds for AFP investment, according to the December 23 report. These are:

Fund name Manager
Aberdeen Global - China A Share Equity Fund  Nicholas Yeo
Amundi Index Solutions - Amundi Index MSCI EMU N/A
BNY Mellon Global Funds - BNY Mellon Emerging Markets Corporate Debt Fund Colm McDonagh
GAM Star Fund - GAM Star Credit Opportunities Anthony Smouha
HSBC Global Investment Funds - Global Emerging Markets Local Currency Rates Nishant Upadhyay, Billy Lang
HSBC Global Investment Funds - Indian Equity  Sanjiv Duggal, Nilang Jitendra Mehta
Man International ICVC - Man GLG Japan CoreAlpha Fund Neil EdwardsStephen HarkerJeffrey Atherton
Pareturn - Security Latam Corporate Debt N/A

 

In addition, the CCR approved two Lyxor ETFs, the EuroMTS All-Maturity Investment Grade (DR) Ucits ETF and the FTSE 100 Ucits ETF.

It also dropped from its list the Credit Suisse Global Biotech Innovators Equity Fund, the Aberdeen Global II - European Convertibles Bond Fund and the Lyxor MSCI EMU (DR) Ucits ETF.

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