Mutual funds could grow AUM in APV market around 30% in next few years - AAFM

Monday, January 31, 2011

Chile's mutual funds will likely keep growing 25-30% over the next few years in the voluntary pension savings (APV) market, mutual fund association AAFM general manager Mónica Cavallini told BNamericas.

Mutual funds saw voluntary pension assets under management (AUM) hit 694bn pesos (US$1.43bn) as of December 31, rising 29% compared with the same time in 2009, according to a report released by AAFM.

"Mutual funds are the second largest player in the APV market, and we expect them to keep growing at similar rates [as in 2010] or even higher," she said.

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The APV market is dominated by the country's private pension fund managers (AFPs) with 62.3% of the 2.7tn pesos in total AUM as of end-June, according to the latest official figures. However, their market share fell from 65.5% at the same time in 2009, while mutual funds increased their share to 20.7% from 19.8%.

Since its creation in 2002, the APV industry has been one of the fastest-growing financial markets in Chile with annual growth rates at around 30%. However, analysts are forecasting growth to slow down 20-25% this year due to the end of tax breaks applied to agreed-upon deposits, a modality that accounts for about one-third of APV assets under management.

Among the 19 mutual fund administrators operating in the APV industry, the Chilean unit of US financial services group Principal (NYSE: PFG) led with a 29.9% share, followed by local financial services firm Banchile.

The number of APV accounts managed by mutual funds hit 128,730 as of year-end, rising 21.5% from the same time in 2009, AAFM said.

The APV industry represented 3.81% and 8.44% of mutual funds' AUM and number of accounts, respectively, as of end-2010.

Insurers, banks and broker houses also operate in the APV market.