Afores will invest in small and medium-sized companies through mutual funds: Consar

The Afores (Retirement Fund Administrator) will begin to invest in small and medium-sized companies (SMEs) through mutual funds, said the president of the National Commission of the Retirement Savings System (consar), Ivan Sheet.

Pliego confided that before the end of this year it is expected to fund two mutual funds in which resources from the Afores will be channeled to support this type of company.

And mortgage fund It is an investment instrument made up of a basket with many values, these can be company shares or corporate or government debt securities. It is managed by a specialized investment firm and receives money from various investors through the purchase of a security or paper.

In this case, the mutual fund in which they will invest or buy the outsidepointed out the president of the Consar, will be made up of several SMEs that will receive said resources so that they can use them in their different projects or particular needs.

The federal official even commented that, with the initiative to reform the Securities Market Law, which among other points is promoting stock financing for SMEs, he will attend to this request that has been on the table for some years.

“It has been a long-standing demand from the Stock Exchanges (BMV and Biva) and from all over the world (…) We would have to wait to find out what these modifications would be and, of course, take advantage of them. What interests us is to simplify without running unnecessary risks and that the Afores can really take full advantage of the investment regime, ”he said during a seminar given by the regulatory body he presides over.

He immediately pointed out that for the administrators of the Mexican pension system, the size of the investment that SMEs individually demand is minimal compared to the capacity they have.

He exemplified: “SMEs request 50 million pesos and the Afores say: “tell me about tickets larger than 500 million pesos”.

Afores are the second largest institutional investors in the country, only behind banks.

According to Consar, at the end of August this year, the Afores managed 5.05 billion pesos, a figure that represents 20% of Mexico’s Gross Domestic Product (GDP).

Investments in the stock market are reduced due to volatility

The Afores have reduced their investments in the stock market, to increase them in government and private debt due to the current volatility caused by inflationary pressures, high interest rates, as well as geopolitical conflicts and fears of a global recession, said Julio César Cervantes , financial vice president of Consar.

During a seminar given by the pension system regulator, the vice president explained that this adjustment in the investment trajectory of the Afores allows them to take advantage of the high rates in the market without exposing themselves to the volatility of the world’s stock markets.

“The Afores have been adjusting their investment trajectory, prior to the crisis of Covid-19had very important positions in international equities, especially in Europe and the United States, now what has been promoted is investment in fixed income instruments, in corporate debt or in government debt instruments”, said Cervantes.

At the end of August of this year, 51.16% of the 5.05 billion pesos managed by the Afores was invested in national government debt, while 15.42% was placed in national private debt or that of large companies in Mexico, according to data from the Consar.

Only 12.64 and 6.18% of the resources were invested in international and national equities, respectively. The rest of the resources (14.60%) were divided into Fibras, international debt, structured instruments (such as Fibras and Development Capital Certificates) and merchandise.

While, in July of this year, the exposure of the Afores in government paper was 50.0%; while in national equities of 6.50% and in international ones of 12.80 percent.