Mutual fund assets in Colombia have experienced an increase in the past year, partly on the back of the country's economic slowdown.
The country's 276 Fondos de Inversión Colectiva (FIC) reached 82.9 trillion Colombian pesos in assets ($28.4 billion) as of the end of June, compared to 60.9 trillion Colombian pesos ($20.9 billion) during the same period last year, according to a report by the market regulator, the Superintendencia Financiera.
Investors have opted to keep their assets in vehicles such as mutual funds given the economy's tepid growth, according to Luisa Fernanda Ariza, investment director at Colombian asset manager Fiduciaria Bogotá.
Analysts had projected the economy would grow by about 2.4% in 2017 but the rate is now expected to be 1.5%, according to BBVA research. An economic slowdown could threaten the credit ratings of Colombian sovereign debt, one of the most popular assets in investors' portfolios.
‘Due to volatility, and a bit of the uncertainty that we've had this year in Colombian sovereign debt, where we have a risk as a result of the economic situation, and due to interest rates abroad not being that attractive, I believe there's been a certain bias toward keeping resources invested in liquid assets [such as mutual funds],’ Ariza said.
In addition, the industry's efforts to draw more investors into mutual funds seems to be paying off, according to Ariza.
‘Something we've achieved is to have more financial deepening, where we already feel that not only the institutional market but also the retail market is more comfortable and understands investing in a mutual fund,’ she said.
However, this run might not last forever. Ariza added that a pickup in economic growth could steer investors back to sovereign debt or to infrastructure projects, and away from mutual funds, before the end of the year.
Overall, the country's fiduciary industry - a subset of its asset management system - ran $469.4 trillion Colombian pesos ($161.1 billion) as of the end of June, up from roughly $400 trillion ($137.3 billion) last year. The growth was due to solid returns and derivatives transactions, according to the Superintendencia Financiera report.