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Mexico’s Principal Afore names new investment boss, targets mutual funds

Mexico’s Principal Afore names new investment boss, targets mutual funds

Mexican pension fund Principal Afore has appointed a new head of investments following the completion of its recent merger with a rival and plans to use international mutual funds to boosts its portfolios.

This week, Principal Afore, owned by the US-based Principal Financial Group, completed the merger with MetLife Afore announced in October last year, creating Mexico's fifth-largest pension fund with $12.5 billion under management.

Following the completion, Juan Manuel Veron, the chief investment officer of Principal Financial Group in Mexico, confirmed to Citywire Americas that Nestor Fernández had been appointed as the pension fund's new head of investments. He had previously held the same position at MetLife Afore and will report to Veron in his new role.

No other major personnel appointments are expected in the near future, Veron added. 

The CIO said that the firm wants to expand the traditional product range of its pension portfolios and is planning to take advantage of the recent regulation change allowing Mexican pension funds to invest in foreign mutual funds for the first time.

'We will take advantage of all the regulatory changes that can help boost the portfolios and the service that we offer our clients,' he said.

The focus will be on foreign mutual funds investing in developed and emerging equity markets. The firm would invest in vehicles covering a specific region, such as Europe and Asia.

'More tactical plays will go through ETFs and more strategic plays will be implemented through more long-term vehicles,' said Veron.

Unlike some of its local rivals like Afore XXI Banorte or Afore Citibanamex, Principal Afore does not have any international mandates in place and Veron said the firm isn't currently in talks with any asset managers.

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