The Swiss banking group SYZ & CO is moving into the Latin American institutional markets with the registration in Chile of the OYSTER European Opportunities fund.
The fund is targeting mainly local pension funds, a fast-developing category of investors in the Andean region.
A few years ago the main South American countries established private, funded pension schemes, which enable individuals to contribute to their retirement, so as to supplement the public pay-as-you-go systems. The assets of these pension funds are experiencing strong growth and should reach USD800bn by the end of 2013, of which an estimated USD250bn is potentially earmarked for international investments. In order for the OYSTER funds to be distributed to pension fund administrators, SYZ & CO has entered into an agreement with HMC, a Chilean specialist in institutional distribution in the Andean markets.
The economic development that many Latin American countries have enjoyed over the last 15 years has generated new demand for health and financial services. Numerous Latin American countries have established private, funded pension schemes that enable individuals to accumulate pension savings, which in part compensate for the weaknesses of the public pay-as-you-go systems. These pension fund institutions are very successful in Latin America and their assets are likely to exceed USD800bn by the end of 2013, with growth of more than 50 per cent expected by 2016 and contributions running at nearly USD2bn per month. In Chile, for example, the assets in pension funds already amount to USD170bn, or 63 per cent of GDP.
Apart from their swift growth, these pension funds also stand out in terms of their great openness to international investments. Chilean funds are, for example, allowed to invest up to 80 per cent of their assets abroad. The total volume of investments that are possible abroad for the whole of Latin America therefore amounts to a potential nearly USD250bn, or more than 30 per cent of the total. After having invested locally or in the North American markets, the region’s pension fund institutions are now showing an increased appetite for Europe, which offers some attractive prospects thanks to its lower share valuation levels and the diversification it allows, notably in terms of currencies.
SYZ & CO’s first fund to be registered in Chile is its flagship European equities fund, OYSTER European Opportunities. A second European corporate bonds fund should follow shortly, in order to satisfy Chilean pension funds’ appetite for fixed-income investments in euros.
In order for the OYSTER funds to be distributed to pension fund managers (PFMs), SYZ & CO has joined forces with HMC Partners, a local specialist in institutional distribution in the Andean markets. Established in Santiago (Chile) in 2009, HMC is also present in Colombia and Peru. In Brazil, HMC has linked up with Itajubá, a company that distributes funds to a São Paulo-based institutional clientele.