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Mexico's Pension Funds Eager for Foreign Equities


By Thomas Black, The Houston Chronicle 

Mexico

January 17, 2005

"We want to diversify the fund and the country risk," said Enrique Garduno, who manages $8.7 billion for the Afore Bancomer pension fund, second in Mexico to Citigroup's Afore Banamex. "The majority will probably be invested outside of Mexico."

Rules that took effect Monday allow pension funds, which manage about $42 billion of workers' savings, to invest 15 percent of assets in stock-related instruments and as much as 20 percent outside of Mexico. In the past, the funds were limited to investing in Mexican government and corporate debt.

Bancomer's plans reflect the strategy of a majority of pension funds. Managers from nine of Mexico's 14 registered private pension funds said they would invest more abroad than in Mexico, according to a Jan. 14 report by Credit Suisse First Boston.

The government created the private funds with individual accounts in 1997 to give workers more certainty they would receive a pension and to increase the country's savings rate.

Last year, the best-performing funds had returns of about 7 percent, only a couple of percentage points above inflation, Garduno said.

Mexican stocks closed higher for a fourth straight session Monday, backed by investor optimism over fourth-quarter earnings reports and the prospects of investment by the country's pension fund managers. The bolsa index closed up 123.15 points, or 1 percent, to 12,817.89.


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