Afores closed March with 152.6 billion in assets under management (AUM). According to CONSAR, 13.8% of that is invested in international equities and 1.4% (2.2 billion) are under investment mandates. Only two of the eleven Afores in Mexico (Afore Banamex and Afore XXI Banorte) use mandates so far. Approximately 60% of allocations were made by Afore Banamex and 40% by Afore XXI Banorte.
An investment mandate through third parties is an investment vehicle of recognized value used by pension funds around the world, both in developed countries and emerging economies. In LatAm, central banks and Afores use mandates as the AFP use mostly mutual funds and ETFs.
Through this vehicle (where the Afore hires the services of a Global Asset Manager), Afores can effectively invest in international markets through specialized and experienced investment teams around the globe.
In all cases, the Global Asset Manager invited must meet requirements approved by the Committee for Risk Analysis (CAR) of CONSAR concerning experience, operational capacity, corporate governance, transparency, integrity and competitiveness criteria, among others.
Investment mandates in eligible countries are part of international diversification that Afores can perform. The set of eligible countries include members of the European Union, members of the OECD with which Mexico has a bilateral free trade agreement, members of the Pacific Alliance whose capital markets are integrated in the market known as conforms MILA and the member countries of the Financial Stability Committee of the Bank for International Settlements.
CONSAR authorized mandates in 2011, Afore Banamex began funding theirs in 2013 and Afore XXI Banorte stated funding them this year. It is expected that a couple of Afores join them this year and, that Asian equities also join the mix.
According to the CONSAR, Afores currently invest in 17 countries, but 40% of the international AUM is invested in the United States; while 26% in global indices; 15% in Japan; 5% in China; 4% in Germany and 3% in the UK. With investments between 1 and 2% are Hong Kong, South Korea, Italy and Canada; and with less than 0.5% are Switzerland, Spain, France, Brazil, Sweden, Australia, the Netherlands and Finland.
So far were two areas in which mandates have been assigned: European Equity (82%) and Global Equities (18%). Participants of mandates in European equities are: BlackRock, Pioneer, Schroders, BNP Paribas and Franklin Templeton; while the Asset Managers with mandates in global equities are BlackRock and Schroders.
To date, only 7% of the potential assets allocated to mandates are used given that Afores can mandate up to 20% of their AUM, which is equivalent to 30.5 billion, but considering that there is also a limit on investing in international assets this number is adjusted to 21.8 billion USD still to be mandated.