The Mexican investment industry has undergone major changes over the last few months, leading an increasing number of asset managers and investment players to enter the market and target both its growing wealth and pension industries.
In the past month, Citywire Americas has learned of three firms looking to launch in Mexico, adding to the growing list of groups either opening offices or expanding their businesses to Latin America’s second largest market.
Much of the recent interest has been sparked by the Mexican pension regulator’s decision to allow the country’s Afores pension funds to invest in international mutual funds for the first time. As a $160 billion industry that is increasingly opening up to international markets, it is attracting more and more admirers.
Third party fund distributor Unicorn Strategic Partners, which recently expanded its Miami operation, is one of the new admirers planning to have a local presence in Mexico.
‘The regulatory change that will allow the Afores to invest in mutual funds means that Mexico has converted itself into a priority market in our expansion plans,’ said David Ayastuy, the firm’s founder and managing partner.
The firm currently distributes funds from Vontobel Asset Management and UK fund house Jupiter in the US offshore and Latin American market and Ayastuy said many groups have been asking him about its capabilities in Mexico.
While the regulatory process may have just been announced and its implementation requires some polishing and clarity, Ayastuy feels it is ‘very important to be present from the start’ when such a change is introduced.
‘Above all, and this forms part of the success [of the operation], you need to find the right local partner which takes time,’ he added.
BNY Mellon Investment Management, the $1.8 trillion US group, is among the asset manager heavyweights currently scoping out the potential of the Mexican Afore market.
‘We’re studying the recent regulatory changes with the Afores,’ said Sasha Evers, the firm’s head of Iberia and Latin America. ‘If it clearly allows investment in international funds, well, we’re interested in launching there.
‘We’re studying it because it’s one thing what you see in the media. We’re studying the new rules, what can be done and also the type of information they’ll need, because the Afores will need information from us to send to the regulator.’
Evers said it was too early to pinpoint the funds might that interest the Afores, but added Latin American investors tend to demand emerging market strategies. The BNY Mellon Emerging Market Debt Local Currency fund, run by a team led by Citywire + manager David Leduc, could be one it chooses to market here.
The US giant already covers Chile, Peru and Colombia from an office in Santiago led by Antonio Salvador Nasur.
Like BNY Mellon, the $360 billion US/UK fund house Janus Henderson has also had its head turned by the decision to allow Afores to invest in mutual funds.
‘One area that I can tell you we’re looking at under a good light is Mexico,’ said Ignacio de la Maza, head of continental Europe wholesale and Latin America. ‘It’s an area we keep exploring and analyzing to see if we can be a participant in the market. We have been in the market, we have been visiting some of the Afores but you never know with exploring.’
Janus Henderson runs $3.7 billion in Latin America and has operated in the region since 2010. It has a presence in Chile, Peru, Colombia and Uruguay, from where the firm also covers Argentine clients.
Following in the footsteps
The biggest group to enter the Mexican market in the past year is undoubtedly Vanguard. The $4.5 trillion passive giant opened its first Latin American office in Mexico City in April last year, hiring BlackRock’s head of Mexico a few weeks later to lead the business.
JP Morgan, which currently has private banking and investment banking offices in Mexico, also announced plans to open an asset management unit in the country around the same time.
On the wealth management and advisory side, Old Mutual’s Aiva wealth planning platform recently signed a partnership with Panama's Inexco Wealth Management to target high-net-worth clients in Mexico.
The new advisory firm, called Unique, is Aiva’s first time partnering with a wealth business to create a new company, highlighting its belief in Mexico’s growth potential.
One thing is clear from this rise in outside interest, once there is a better understanding of what the new mutual fund regulation entails, more players could very soon step into the limelight and declare their interest in the burgeoning Mexican market.