Latin American equity funds ranked as Chilean pension funds’ top international investment pick in December, surpassing previous favorites such as European equities.

Last month, Chilean AFPs’ pumped a net $533.4 million into foreign mutual funds investing in Latin America equities in 2017, according to a report by Chilean firm HMC Capital. It also marks the pension funds’ biggest investment in the region in the last 12 months.

Meanwhile, the AFPs pulled a net $471.8 million from US equities in December, bringing their total retreat from the asset class in 2017 to more than $5.2 billion.

US equities were the pension funds’ top international bet until March. However, the AFPs have pulled money from the asset class in every month since but November on the back of high valuations and political uncertainty, according to previous comments by HMC’s head of distribution Nicolás Fonseca.

In December, the AFPs invested $371.3 million in European equity funds, bringing their total holdings in the asset class to $13.2 billion.

The AFPs also pumped $101.3 million into Asian equity funds in December, a much smaller sum than in other months, according to the report. However, the investments in December pushed total assets in Asian stock funds to more than $20 billion, cementing the asset class as the largest holding in the AFPs’ international portfolio.

In all, AFPs invested a net $318.2 million in foreign equity funds in December.

Last month, the pension funds also increased their allocation to foreign fixed-income funds by a net $366.8 million. The flows included net flows of $349.5 into emerging market debt, pushing total holdings in the asset class to $3.6 billion.

In December, high returns from international assets and a sharp appreciation of the Chilean peso boosted the total assets of Chilean AFPs 4.8% to $211 billion, HMC's Fonseca said. He added that total AFP assets grew 21% in dollar terms between December 2016 and the end of last year. 

Favorite funds

The equity funds taking in the most money last month were the Aberdeen Latin American Equity, with $332.5 million in inflows, the Invesco Asian Fund with $189.7 million and the JPMorgan Japan Equity with $135.9 million.

On the debt side, the most popular funds were the NN Emerging Markets Debt Hard Currency fund with net inflows of $113.6 million, the Ashmore Emerging Markets Short Duration with $93.4 million and the Robeco High Yield Bonds with $50.3 million.