The mutual fund industry is experiencing a favorable moment in Peru, showing promising growth figures at the end of the first half of 2024. One contributing factor is increased investor confidence in the local economy, highlighted by Credicorp Capital Sociedad Administradora de Fondos (SAF), which is reflected in a growth in strategies in soles that surpasses those in dollars.
The market reached 40 billion soles (approximately $10.65 billion) as of June this year, according to a presentation shared by the manager with the press. This represents a growth of 58% since mid-2023.
In the presentation, Óscar Zapata, General Manager of Credicorp Capital SAF, emphasized that –isolating the exchange rate effect– the fund market in soles grew more than 30% in the period, while dollar strategies registered an increase of 20%.
What explains the boom in the industry in the Andean country? According to the manager’s analysis, 35% of the overall market growth comes from fund appreciation –with better fund returns– and the exchange rate effect. The remaining 65%, they estimate, comes from new client balances, noting a year-over-year growth of more than 10% in participants.
Better Conditions
Regarding the increased interest of local investors, Zapata highlighted two key variables: interest rates and confidence in Peru.
From the perspective of interest rates, Credicorp Capital points out that the scenario of decreasing rates makes mutual funds a more attractive option –in terms of profitability– than other savings alternatives. This is in a context where the Central Reserve Bank of Peru (BCRP) has been gradually lowering reference rates from the peak they held during most of 2023, from 7.75% to the current 5.75%.
Additionally, Zapata explained, there is greater client confidence in the local economy, which promotes the investment of resources through local fund management, rather than various investment options abroad. Reflecting this, he noted, is the more marked boom in vehicles in soles versus dollars.
Looking ahead, Credicorp Capital SAF expects the mutual fund market to continue growing in the second half of the year. They estimate that the industry should close the year with assets above 45 billion soles (approximately $12 billion). This is explained by the anticipated economic reactivation in the second half of the year and further rate cuts by the U.S. Federal Reserve and the BCRP.
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