Why Trump’s Second Term Could Transform Asia

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The next term of Donald Trump will have global repercussions, and Asia will be no exception. It is clear that a victory for Kamala Harris would likely have meant continuity in Joe Biden’s policies; however, the Republican triumph will bring significant changes in the political, economic, financial, and regulatory arenas. “Profound and rapid changes are coming to Asia. In cross-border trade, currencies, risk appetite, and geopolitics, the influence of the new Washington administration will be far-reaching. In our view, the effects will be challenging and likely materialize sooner rather than later, possibly during the first half of 2025,” said John Woods, CIO Asia at Lombard Odier.

The firm points out that the relationship between the U.S. and China is fundamental to America’s broader engagement with Asia, with trade playing a key and bipartisan role. From the U.S. perspective, this relationship is ambivalent. According to Woods, on one hand, China is one of America’s most important trading partners; on the other, it raises concerns about trade imbalances, currency manipulation, and market distortions.

“The goal of a U.S. manufacturing revival drives the Trump administration’s promises to bring back jobs and ‘make America great again.’ This was a key aspect of his campaign, backed by tariff and quota proposals. With potential 60% tariffs on Chinese goods and 10% on the rest of the region, the risks are significant. However, we have seen this scenario before. In 2018, President Trump targeted approximately $360 billion in Chinese imports to address intellectual property concerns and reduce the trade deficit. While the direct impact of the tariffs was limited, the indirect effects significantly dampened global corporate confidence and investment,” Woods emphasized.

From a regional perspective, the secondary effects of U.S. fiscal and monetary policy under the new administration could be more extensive than the tariffs. “A focus on border control, tax cuts, and tariffs could increase inflationary pressures in the U.S. economy, leading to higher interest rates and bond yields,” Woods added. In fact, after the election, Lombard Odier raised its forecast for the Fed’s terminal rate to 4%. According to Woods, as higher U.S. rates trickle down to Asia, local economies—already impacted by weaker exports—will face a slower growth outlook.

Additionally, the dollar will play a crucial role in this transmission. “A strong dollar makes dollar-denominated imports more expensive, raising inflation and straining consumers and businesses in import-dependent countries. Nations with significant dollar-denominated debt will face higher repayment costs, affecting national budgets and growth investments,” Woods noted.

In this challenging macroeconomic context, Lombard Odier believes the market opportunity question will shift from “buy Asia” to “why Asia?” While there may be attractive opportunities in Asian equities, U.S. markets continue to draw investment flows, reflecting a dynamic economy and robust corporate performance, particularly among large tech firms.

“Our recent decision to increase portfolio exposure to U.S. equities reflects this American economic exceptionalism, which we anticipate will persist as the macroeconomic effects of Trump’s policies take hold. We note that consensus forecasts for earnings growth in the U.S. are on par with those for Asian equity markets. Investors face a choice between risk and opportunity in Asia versus the U.S., and historically, they have favored the latter. While a strong dollar is likely to boost earnings for Asian companies sensitive to U.S. demand, it could also increase the debt servicing burden for quasi-sovereign issuers and banks critical to the region,” Woods explained.

In this regard, Woods clarified that companies with dollar-denominated debt will likely face higher repayment costs, straining their financing and investment activities. He noted that during Trump’s first term, dollar-denominated credit spreads steadily widened as tariffs were imposed, although they remained stable immediately after his election in 2016.

“We believe that Asian economies will maintain reasonable growth in 2025, as the economic impact of tariffs is relatively moderate compared to recent stress episodes, such as the banking crisis or the global pandemic. China’s shift toward stimulus offers hope that the country can withstand the impact of new U.S. tariffs, which could anchor the region’s financial market performance. However, it is hard to imagine growing global demand for Asian risk assets until the president-elect’s likely transactional approach to tariffs results in more encouraging developments than his campaign promises,” Woods said.

Finally, Woods noted that the most profound impact of the Trump administration on Asia could be its deglobalizing effect on international relations. He reflected that the U.S. has increasingly focused on domestic interests, a trend that is likely to continue, potentially leaving room for a more assertive China to fill the vacuum.

“The mutual desire of the U.S. and China to decouple their economic relationship has evolved from a trade dispute into a more permanent shift. Asia largely orbits around China’s economy and the U.S.’s political influence, creating tensions historically managed with pragmatism and flexibility. However, this balance is eroding. As Asia’s geoeconomic dynamics change, local investment strategies must adapt to increasing tensions and points of conflict. The economic uncertainty stemming from potential trade agreement failures and sanctions exacerbates the situation,” Woods argued.

In one of his concluding remarks, Woods highlighted that while many Asian nations have maintained a non-aligned stance between the U.S. and China, China’s economic appeal—particularly through multiregional infrastructure developments like the Belt and Road Initiative—makes neutrality increasingly challenging. “This could lead to a realignment of positions, resulting in new spheres of influence,” concluded John Woods.

Héctor Silen Joins Insigneo in Miami

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Insigneo continues its expansion strategy in Miami with the hiring of Héctor Silen.

According to a statement from the company accessed by Funds Society, this new addition is part of Insigneo’s efforts to strengthen its presence in the wealth management business.

“Héctor shares Insigneo’s passion for delivering exceptional client experiences, and we are thrilled to have him on board to help drive our mission,” said Alfredo J. Maldonado, Head of the New York Market.

Based in Miami, Silen brings over two decades of experience in wealth management, international banking, and family succession planning.

In addition, he has led teams of international representatives and managed a wide range of products, including private banking solutions and multi-currency wealth management.

He has held leadership roles at StateTrust Investments, Venezolano de Crédito, and Private Portfolio Advisors.

“Solid technology, unmatched custody, renowned risk management, and access to markets and opportunities—all of this makes Insigneo the optimal platform for investment professionals who want to work with a highly respected team in the industry, for the benefit of our clients’ wealth and their families. Based on a philosophy of client-focused relationships, simple and transparent processes, and innovative and lasting solutions,” Silen commented, according to the firm’s statement.

The Fed Cools Market Expectations for Significant Rate Cuts in 2025

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Fed ajusta expectativas de mercado

The Fed has cut rates for the third time since March 2020 by 25 basis points, as expected. International asset managers highlight that Powell acknowledged this decision was “more difficult” than previous meetings and emphasized it was “the right decision” given current conditions. This follows the recent FOMC communication emphasizing the merits of a “gradual” normalization of policy, supported by resilient economic fundamentals and growing political uncertainty with the arrival of President Trump.

“A significant modification in the statement’s language reinforces how measured this trajectory is. The incorporation of the ‘magnitude’ and ‘timing’ signals a slower rate-cutting path, with markets now pricing in a 90% chance of a pause in January, aligning with our assessment. Powell reinforced this message, noting that while policy remains restrictive, they are ‘significantly closer to neutrality,’ justifying a more cautious approach reflected in the reduction from four to two projected cuts in 2025,” says Salman Ahmed, Global Head of Macro and Strategic Asset Allocation at Fidelity International.

For Dongyue Zhang, Head of APAC Investment Specialists for Multi-Asset Investment Solutions at abrdn, the Fed took a hawkish tone. “These signals solidify our view that the Fed will pause in January as it slows the pace of easing. We expect a cut in March, depending on continued cooling of inflation. In our view, there’s a higher risk of fewer moves, especially if we see fireworks in the early days of the Trump administration. Judging by the slight shift in the Fed’s statement, we anticipate increased volatility due to policy changes under the Trump Administration in 2025,” Zhang notes.

This new stance represents another significant adjustment in the Fed’s approach, which just three months ago led to a 50-basis-point cut. “This shift aligns with the idea that persistent inflationary pressures would prevent the Fed from implementing the easing cycle markets had anticipated. Instead, we expect the Fed to recalibrate its policy, shifting from a restrictive stance to a less restrictive one. That’s exactly what’s happening, with Powell hinting that the central bank might end consecutive cuts, potentially pausing as soon as its next meeting in January: ‘We are at, or near, a point where it will be appropriate to slow the pace of further adjustments,’” says Jean Boivin, Head of the BlackRock Investment Institute.

In this regard, George Brown, Senior U.S. Economist at Schroders, expects an additional quarter-point cut in the March 2025 meeting, followed by a 50-basis-point hike in 2026. “It’s true that the central bank’s reaction function could be distorted if its independence were undermined by the Trump Administration. However, in our view, measures to ensure that independence are sufficient to mitigate this risk, as is the fear of market backlash,” Brown explains.

The Key Lies in the Dot Plot

Regarding the Summary of Economic Projections (SEP), Ahmed notes that the Fed appeared less aggressive in the dot plot: “The 2025 dot removed two cuts, exceeding market expectations of just one less cut. This adjustment is accompanied by stronger growth projections, higher inflation, and lower unemployment in 2025,” he states. He adds: “Importantly, the committee’s assessment of the long-term neutral rate was adjusted upward, with the median rising from 2.9% to 3%, and the central trend range increasing to 2.8%-3.6%.”

For Daniel Siluk, Head of Global Short Duration & Liquidity and Portfolio Manager at Janus Henderson, the SEP is markedly hawkish, with only two rate cuts projected for 2025, indicating heightened concern about the persistence or resurgence of inflation. “Inflation forecasts for 2025 have been revised upward to 2.5% (from 2.1%). Economic growth projections have been slightly raised for 2025, to 2.1% from 2.0%, but downgraded beyond the forecast horizon, with GDP growth for 2027 revised down to 1.9% from 2.0%. This suggests that more restrictive monetary policy has yet to make a significant dent in the economy,” notes Siluk, who observes that the market’s initial interpretation was hawkish, as evidenced by the flattening of the yield curve.

“Powell made it clear that a slower pace of cuts is the baseline case. He argued that inflation is still moving in the right direction, downplayed some of the stickiness in core inflation, and noted that the labor market is still cooling, but only gradually. We believe that if tariffs were the primary reason for the inflation uptick, we would have expected to see a softer growth forecast for 2025. Powell himself seems to have discounted tariffs, citing significant uncertainty regarding the scope, timing, and impact of tariff measures. We maintain our forecast for two more rate cuts next year, but risks have clearly shifted toward fewer (or no) cuts,” Bank of America analysts add.

David Page, Head of Macro Research at AXA IM, takes it a step further, predicting that the Fed will cut rates only once in March next year to 4.25%, depending on the magnitude of the new administration’s policies. “We are also more pessimistic about the long-term impact of these policies and expect them to weigh on growth through 2026, which we believe will prompt the Fed to resume easing in the second half of 2026. We forecast the FFR to end 2026 at 3.5%, now aligned with the Fed’s projections, but we do not believe the path will be as smooth as implied by the Fed’s mild cuts of 50, 50, and 25 basis points,” Page concludes.

José Bandera Joins the Wealth Management Division of BTG Pactual

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José Bandera en BTG Pactual

A seasoned banker from Santander Private Banking International, José Bandera has recently joined BTG Pactual, as announced on his LinkedIn profile.

Bandera has been working with the Wealth Management division of the Brazilian institution since November, based in Miami, Florida.

For over 18 years, the professional held various roles at Santander Private Banking International, serving successively as Executive Director, Portfolio Advisor, Portfolio Manager, and Risk Analyst.

With an educational background from the University of San Luis, the University of California, and the London School of Economics, Bandera also has experience in risk management at Banco Pichincha in Miami and Siemens Financial Services.

Capital Group Names Eric Figueroa Managing Director in Its US Offshore Team

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Capital Group nombra Eric Figueroa

Capital Group, an investment company with over $2.8 trillion in assets under management, is enhancing its offshore operations in the United States following the opening of its Miami office earlier this year. The firm has now appointed Eric Figueroa as Managing Director for its US Offshore team, according to a company statement.

Based in Capital Group‘s new Miami office, Figueroa will report to Mario González, head of the Iberia and US Offshore Client Groups. In this role, he will work alongside Capital Group’s Miami team, focusing on further developing and strengthening relationships with financial intermediaries across the firm’s US offshore business.

With over 20 years of experience in the industry, Eric Figueroa joins Capital Group from MFS Investment Management, where he served as Senior Regional Consultant for the Southeastern United States, Central America, and the Caribbean. Prior to that, he held leadership roles at Itaú International and HSBC Global Banking and Markets.

“Following the opening of our new Miami office earlier this year, we are delighted to welcome Eric to the team. His extensive experience and strong market connections will be instrumental in expanding Capital Group‘s investment offering in the US offshore market. This appointment underscores our commitment to this strategically important market and our dedication to providing exceptional service, innovative investment opportunities, and tailored solutions aligned with our clients’ long-term goals,” said Mario González, head of the Iberia and US Offshore Client Groups at Capital Group.

For his part, Figueroa stated: “I am excited to join Capital Group, recognized for its robust analytical resources and long-term investment philosophy. I look forward to working with the team to support our US offshore clients in achieving their investment goals.”

Latin America Offers Opportunities in Real Estate, but Miami Remains More Tempting

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Inversiones inmobiliarias en Miami vs América Latina

Real Estate Investment is a Major Driver for Latin Americans and, for this reason, developments are growing throughout the continent. Chile, Colombia, Costa Rica, and Mexico are emerging as countries investors are watching. However, the experts consulted by Funds Society defended Miami as the best investment destination for various reasons.

“Miami will continue to establish itself as a key destination for real estate investment, because it is a safe and stable market. Especially attractive for Latin Americans seeking to protect their capital,” said Peggy Olin, President and CEO of OneWorld Properties.

The professional added that the city’s steady growth “as a center for business, culture, and international entertainment will continue to attract local, national, and international buyers,” further driving this trend.

The President of OneWorld Properties also commented that the combination of high prices and low interest rates fosters real estate development.

“By facilitating access to financing for both investors and buyers, it encourages developers to build new projects to meet the growing demand,” explained Olin, who detailed that projects with prices starting at $450,000 “make investing in Miami more accessible to an international audience.”

Alicia Paysee, Vice President of Sales at 14 ROC in Miami, for her part, said that Latin Americans choose Miami for “proximity, culture, and stability, as well as the opportunity to invest in real estate, which has traditionally been the foundation of most transgenerational wealth.”

According to the executive, “it makes sense that, when diversifying their assets, people look to the long-term strength of real estate in cities with an upward trajectory” regarding the prospects Miami presents.

Along the same lines, Olin indicated that the city is a “natural bridge” between Latin America and the United States, making it a “familiar and attractive environment.” She also added, “the continuous growth of businesses and population reinforces its potential for long-term appreciation.”

The Development of Latin America

The region is developing in the real estate market with certain countries leading the way. Chile, Colombia, Costa Rica, and Mexico are the most prominent, highlighted Olin.

In the case of Chile, according to the OneWorld Properties executive, it stands out for its “solid economy and clear rules” for foreign investors.

Regarding Colombia, especially in cities like Medellín and Bogotá, the expert assured that it offers opportunities in an expanding market. Costa Rica, for its part, “combines an investor-friendly environment with a focus on sustainability and luxury tourism, attracting buyers interested in high-value properties.”

The Case of Mexico

Geographical proximity to the United States and trade agreements make Mexico attractive “both for international buyers and local developers,” said the President of OneWorld Properties. However, she qualified, political uncertainty and security in certain regions can be limiting factors for some investors.

The most attractive cities are Mexico City, Monterrey, and Guadalajara, “which combine economic growth with expanding infrastructure,” Olin concluded.

Paysee, for her part, expressed interest in knowing what will happen with the new President, Claudia Sheinbaum. “Time will tell what kind of policies they will implement that may impact investment. Traditionally, the Mexican market has offered great opportunities and has received a lot of foreign investment, especially in tourist and beach destinations,” she summarized.

Argentina: New Opportunities?

The changes proposed by the government of Javier Milei, such as reducing inflation and liberalizing the market, “could boost the real estate sector in Argentina if they succeed in generating confidence and economic stability,” said Olin. However, the expert warned that “probably” international investors will adopt a cautious approach in the short term while evaluating the implementation and results of these policies.

Paysee, for her part, believes that with a stable economy, decreased inflation, and reduced regulation, they should attract greater investment. For example, the expert explained, the repeal of rent control laws has had a tremendous impact on inventory, with an increase of more than 100% in rental availability. It will be interesting to see the impact that their policies will have on inflation in the coming years, she concluded.

SPVs vs. Structured Notes: Which is the better option?

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SPVs vs Notas estructuradas
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Managing modern portfolios demands flexible and diversified financial instruments that enable the maximization of returns while managing risks efficiently. Two widely used instruments in this context are structured notes and special purpose vehicles (SPVs). While both serve specific purposes, their applications vary depending on project needs, portfolio structure, and investor risk profiles, explained the specialized firm FlexFunds.

To choose the most suitable instrument, portfolio managers must deeply understand the characteristics, uses, and risks associated with each tool, ensuring they align with their clients’ objectives and needs. Below, we examine the specifics of each option.

Structured notes

Structured notes are customized financial instruments that combine fixed-income elements with derivatives, offering managers potential returns tied to underlying assets like stocks, indices, or commodities.

When to use a structured note:

  1. Risk-adjusted return optimization
    Structured notes enable tailored risk-return profiles. They are valuable for managing portfolios focused on capital preservation while capturing moderate returns.
  2. Access to complex assets
    Portfolios seeking exposure to hard-to-trade or replicate assets (e.g., custom indices or baskets of stocks) can use structured notes as an efficient solution.
  3. Risk hedging
    These instruments allow for hedging strategies, such as market downturn protection, often at a lower cost than directly trading derivatives.
  4. Cash flow management
    Structured notes offer flexibility in terms of maturity and coupon payments, facilitating integration into portfolios with specific liquidity needs.

Risks:

  1. Counterparty risk: They rely on the issuer’s solvency, typically banks or financial institutions. If the issuer defaults, the investment could be lost.
  2. Illiquidity: These notes are illiquid and challenging to sell before maturity.
  3. Complexity and transparency: Their structure can be difficult to understand, and associated fees may lack transparency, potentially negatively impacting the investor.

SPVs (Special Purpose Vehicles)

An SPV is a separate legal entity created to manage specific assets or risks, isolating these operations from the parent company. These structures are commonly used in asset securitization and specific projects.

When to use an SPV:

  1. Risk isolation: SPVs separate risks associated with specific assets from the parent company’s general balance sheet, protecting both investors and the parent company.
  2. Financial flexibility: They enable capital raising through tailored instruments, such as bonds or structured investment vehicles.
  3. Risk distribution: Funded by multiple investors, SPVs distribute risks among participants.
  4. Cost efficiency: Depending on the jurisdiction, SPVs may be more cost-effective to establish compared to other alternatives.
  5. Management of complex assets: For portfolios including illiquid or high-risk assets, SPVs simplify the repackaging, valuation, and sale of these assets.

Risks:

  1. Operational complexity: Structuring and managing an SPV can be complicated and require technical expertise.
  2. Transparency issues: Legal separation does not always fully eliminate reputational or financial risks to the parent company.
  3. Market exposure: SPV performance depends on the assets it manages; if these assets underperform, investors may face losses.

Both instruments offer significant benefits, but the choice depends on portfolio objectives and strategies. Structured notes are suitable for managers seeking diversification with some level of protection, while SPVs are ideal for specific projects or asset structuring. The key is to carefully evaluate the risks, costs, and benefits of each option before making investment decisions. The table below summarizes the main differences between these instruments.

 

As a leader in creating investment vehicles through Irish SPVs, FlexFunds simplifies a process traditionally seen as complex and costly. Thanks to our expertise and innovative approach, we enable portfolio managers to design investment structures tailored to their strategies, achieving faster and more cost-efficient execution.

By combining the advantages of structured notes and SPVs, FlexFunds offers customized solutions that maximize efficiency in capital raising and distribution. These solutions are also cost efficient, as they can be issued in half the time and cost associated with conventional alternatives.

To explore how FlexFunds can enhance your investment strategy in international capital markets, don’t hesitate to contact our specialists at info@flexfunds.com

Prosegur Crypto Opens the First Cold Storage Custody Bunker for Crypto Assets in Argentina

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Prosegur Crypto Argentina

Prosegur Crypto, the institutional digital asset custody service of Prosegur Cash, has announced the inauguration of Argentina’s first crypto cold storage custody bunker and the second in Latin America, according to a statement from the security company.

The facility is a cold storage vault for crypto assets, offering a high level of security using cutting-edge technology to safeguard institutional digital assets offline. It is the second of its kind in Latin America, following the opening of a similar facility in Brazil.

Online hacking or theft losses can often reach millions of dollars, making professional custody of these assets essential. Prosegur Crypto built the cold storage vault in Buenos Aires, similar to those it launched in Madrid, Spain, in 2021, and São Paulo, Brazil, in 2023. This positions Prosegur Crypto as the first global security company to enter the digital asset market, offering a comprehensive service and model. The company has already received authorization from the National Securities Commission (CNV) to operate in the Argentine market.

The crypto asset vault, also referred to as a bunker due to its high security, is based on patented cold storage technologies. This solution ensures high levels of security, reliability, and availability for high-value digital assets. These assets are stored entirely in cold wallets, keeping clients’ private keys offline and disconnected from the internet. The bunker is equipped with over 100 protection measures distributed across six layers of security to safeguard the custody chain of digital assets. Clients’ assets are not used or moved for any purpose other than custody. Additionally, the facility includes technological mechanisms for quickly and securely making crypto assets available to clients in an automated manner.

“This new crypto bunker marks a significant milestone for our company as it expands our digital asset custody offering to Latin America, maintaining the same excellence and expertise of our traditional custody service. Our priority is to guarantee the security of assets, ensuring they are never used for purposes other than custody,” said José Ángel Fernández, Executive Chairman of Prosegur Crypto and Corporate Innovation Director of Prosegur Cash.

With these new crypto custody facilities, Prosegur Crypto promotes and facilitates the digitalization of financial assets in the country by creating an integrated institutional buy-sell and custody offering that includes regulation, technology, operations, and compliance. The company is also prepared for the tokenization of capital market instruments and real assets, such as gold, real estate, or the agricultural industry. Furthermore, it provides a platform for maintaining positions in digital assets for governmental entities and includes an asset seizure platform for law enforcement.

Additionally, Prosegur Crypto aims to offer financial institutions, government agencies, investment funds and managers, family offices, and exchanges a secure process for managing their digital assets, including submitting transactions to the blockchain without direct internet connectivity, thus maximizing protection against cyberattacks.

Vanguard: This Year Has Also Been a Record Year for ETFs in Latin America

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Vanguard ETFs récord América Latina

According to a report by ETFGI, this year will be historic for the global ETF sector. By the end of August, the industry reached a new all-time high of $13.99 billion in assets under management, surpassing the previous record of $13.61 billion.

In the emerging markets of Latin America, the trend is similar, driven by increased liquidity in the region. This is particularly evident among the largest pension funds, whose managers have long used ETFs as one of their preferred tools to diversify portfolios and maximize returns, according to Vanguard.

Juan Hernández, Director for Latin America at the firm, spoke with Funds Society about the performance of the ETF market in Latin America.

“It has been a record year globally for the ETF industry, which has benefited us because Vanguard is leading the market in ETF flows worldwide. For us, Latin America has been no exception. In the region, we have reported increasingly better results,” he noted.

That said, Hernández emphasizes that the performance of the ETF market in the region is not a temporary trend or a passing fad.

“This is not just about this year or a circumstantial issue; it is a structural matter. The Afores in Mexico and AFPs in South America were the first managers to adopt ETFs to diversify their portfolios, but today, more and more retail investors and intermediaries, such as banks and asset managers, are using ETFs to build diversified international portfolios. This trend has continued this year,” he explained.

According to Juan Hernández, investors recognize Vanguard’s long-standing development of the ETF market, starting with the introduction of the first indexed fund for individual investors in the United States in 1976. The firm has built a reputation for strict index tracking, rigorous risk controls, and low costs.

“For example, indexed ETFs are designed to function as part of a core indexing strategy that targets major asset classes,” the executive explained.

In this sense, institutional investors like Mexico’s Afores have taken advantage of the benefits of investing in ETFs, although they are just one example, as these investment vehicles are increasingly in demand.

“The Afores in Mexico, which represent the largest pension system in the region, began investing outside of Mexico in foreign securities via ETFs. They are very accustomed to using this instrument,” he added.

“Investors like the Afores have adapted to modularity, using ETFs to invest in the U.S. stock market, European stock markets, the Japanese market, emerging markets, treasury bonds, corporate bonds—there are many ways to invest. Afores now use ETFs as one of their preferred investment mechanisms,” he noted.

Liquidity: A Driving Factor

The increase in liquidity, both in Mexico and other countries in the region, has played a key role in the growth of ETF trading, Juan Hernández explained.

“In Mexico, the 2020 pension reform generated more inflows into the Afores. They now have more liquidity and, therefore, greater needs to invest in foreign securities. ETFs are their preferred choice over mandates or active funds by far,” he explained, adding that this is due to the advantages ETFs offer in “transparency, cost, liquidity, and modularity, allowing investment in different asset classes.”

“In Colombia, a pension reform was recently approved, and managers are already analyzing how and where they will invest that additional 6%. Similarly, in Chile, a pension reform is under discussion, including how resources will be invested. ETFs are at the forefront for all the advantages we have mentioned,” he concluded.

J.P. Morgan Asset Management Wants to Be a Key Provider of Active ETFs for Afores

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J.P. Morgan ETFs Afores

J.P. Morgan Asset Management Sets Out to Leverage Opportunities Offered by the Legislative Change Announced by Consar on November 21, 2024, Allowing Mexico’s Afores to Invest in Active ETFs

“The approval of active ETFs for Afores in Mexico is a significant milestone for the country’s pension system. J.P. Morgan Asset Management aspires to be a valuable resource for the investment teams of Afores, showcasing our success as an active manager and the breadth and depth of our global ETF offering,” said Giuliano De Marchi, Head of Latin America at J.P. Morgan Asset Management, in a statement.

“Afores will benefit from J.P. Morgan’s experienced investment team, its investment expertise, strategic approach, and the flexibility and agility that come with actively managed ETFs,” he added.

The ETF industry has expanded rapidly, currently representing $14.3 trillion in assets, with projections to reach $30 trillion by 2030. While the U.S. market has been the dominant force in this expansion, there has been significant positive momentum in markets around the world in recent years.

Today, there are 5,700 ETFs listed globally, comprising approximately 3,900 index-tracking ETFs and over 1,800 active ETFs. The gap between these two types of ETFs has been narrowing quickly: while index-tracking ETFs have grown at a compound annual growth rate (CAGR) of nearly 20%, active ETFs have grown at a CAGR of about 50% over the past five years.

J.P. Morgan AM launched its first ETF in the United States in 2014 and listed its first ETF in Mexico in 2018. Over the past decade, the firm’s global ETF platform has expanded significantly. Today, it is the second-largest provider of active ETFs by assets under management, with over $215 billion in AUM and more than 100 ETFs across various asset classes.

“As a leading global active manager, we are excited to bring our top-tier active management capabilities to the Afores, and this is just the beginning. We have been serving these clients in Mexico for more than 10 years, and this approval marks a significant milestone, allowing us to offer Mexican pension funds the many advantages of active ETFs while striving to deliver the highest quality investment capabilities to our clients,” said Juan Pablo Medina Mora, Head of Mexico at J.P. Morgan Asset Management.

Carlos Brito, Head of ETFs for J.P. Morgan Asset Management in Latin America, added: “We are particularly proud of the success of active ETFs in other markets. Active ETFs offer a range of benefits that make them an attractive investment option for many investors. They are managed by portfolio managers who actively select and adjust the ETF holdings to capitalize on market opportunities. This active management can potentially lead to higher returns, as managers can respond to market changes, economic trends, and company-specific events. Additionally, active ETFs provide investors with greater flexibility and diversification, allowing access to a broad range of investment strategies and specific outcomes.”

J.P. Morgan Asset Management currently manages $3.5 trillion in assets (as of September 30, 2024). The company offers global investment management across equities, fixed income, real estate, hedge funds, private equity, and liquidity.