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Latin America is an increasingly complex and sophisticated market for asset managers.
12
Oct

Chilean AFPs added USD 3.4 billion to Asian and European equity in June-August period

Chilean AFPs boosted allocations to Asia and Europe in August, as total AUM abroad reached USD 69.9 billion, the highest level since June 2015. Overall cross-border flows were positive for the month at USD 451 million.

Asia and Europe are magnets of Chilean AUMs

The pension fund managers allocated USD 614 million into Asian equity in August, with USD 163 million of that going into Investec Asian Equity-I Acc Grs USD, which had a 2.3% return for the month and 31% for the year. Since June, the AFPs added a cumulative USD 1.7 billion to the region.

For the month, there were 24 allocations into Asian equity compared with 14 redemptions and this occurred as the average return for the category was 1.5% for August and 24% for the year.

The second biggest deposit within the Asia equity category was for USD 140 million and went to the Invesco Greater China Equity-S USD Acc.

As a result, equity Asia consolidated itself as the category with the biggest share of the Chilean portfolio abroad as it went from a 21.7% market share to 23.4% of the total portfolio.

European equity, which is the second-most-favored region of the AFPs, with 14.9% of the total, has seen positive allocations between February and August, with the three biggest deposits in June, July and August. The August allocations totaled USD 462 million, capping a USD 1.7 billion total cumulative net inflow during the June-August period.

The average return for Europe equity for August was 0.3% while for the year it was nearly 25%. Within the category, there were 14 allocations compared with half as many redemptions. The biggest allocation, USD 161 million, went into Man GLG Continental European Growth-C, which had a 0.5% return for August and 26% for the year.

North America vs. Latin America

Within North America equity, there was a USD 846 million net monthly redemption during August, when the average return for this category was 0.3% for the month and nearly 15% for the year.

The biggest redemption within North American equity in August was for USD 192 million and came out of the Vanguard-run Vanguard Value ETF. There were 20 redemptions and five allocations within North America equity during the month. North America has seen redemptions for the past six months but the August withdrawal was the biggest in this period.

As a result, equity North America, which was the second biggest category in July with a 15.7% share, dropped one notch to third with a 13.7% share of the total Chilean portfolio abroad.

Latin America, on the other hand, has steadily gained AUMs in recent months and saw in June the biggest monthly allocation since November 2016.

Chilean AFPs allocated in August a net USD 340 million into Latin America and this happened as there was a net average return for this category for the month of 4.6% while for the year it was nearly 27%. The biggest allocation within Latin America was for USD 130 million and went into iShares MSCI Brazil Capped. The return for the month for this ETF was 6.1% and 22% for the year. There were six allocations compared with four redemptions within this category.

Equity Latin America had a 5.2% share of the Chilean portfolio abroad in August. This compares with just 1% a year earlier.

Japan, bonds, money market

Chilean AFPs allocated in August USD 449 million into emerging market bonds and this resulted from the balance of 19 deposits and nine redemptions.

The biggest allocation within emerging market bonds was for USD 109 million and went into GAM Local Emerging Bond-C USD, which had a 1.6% return for the month and more than 10% for the year.

As for the Japan category, there was a net redemption in August for USD 40 million that occurred as the return for the month for Japan was 0.5% while for the year it was 21%.

There were within the Japan category six redemptions compared with three allocations. Japan has seen net redemptions in two out of the past three months.

The biggest allocation within the Japan category in August was a  USD 147 million net deposit into Eastspring Japan Dynamic-B, an Eastspring-run mutual fund.

Emerging markets equity, high yield, money market

Chilean AFPs redeemed from the emerging market equity category in August a net USD 89 million that resulted from three allocations compared with eight redemptions.

This net redemption occurred even as the return for the month for emerging markets was 2.2% in the month and 22% for the year.

Equity emerging markets has seen ret redemptions in the past four months.

In the high yield bond category there was a USD 69 million net redemption that resulted from the balance of 15 redemptions and six deposits. This category had a 0.2% return for the month and 9.5% for the year.

In August Chilean AFPs redeemed USD 401 million from JP Morgan US Dollar Liquidity-Institutional Dist., a JP Morgan-run mutual fund. The money market category has seen over USD 1 billion in Chilean redemptions during June-August.

GAM becomes second biggest manager

iShares increased the Chilean AUMs it manages to USD 6.5 billion in August from USD 6.4 billion in July.

Gam, which was the third biggest manager of Chilean AUMs in July, rose to second in August as it saw the total it manages increase to USD 5.2 billion from USD 3.8 billion in the previous month.

Vanguard, which was second in July with USD 4.6 billion of Chilean AUMs, went down to third in August with USD 4.2 billion.