Mutual funds seen increasing pension market share

Friday, May 21, 2004

The Chilean mutual fund industry is set to boost its share of the local voluntary pension market during the next couple of years, Jorge Paloma, general manager of Chile's mutual fund association told BNamericas.

In March 2002, the Chilean government authorized pension fund managers or AFPs, insurance companies, mutual funds, banks and brokerage firms to offer voluntary retirement savings accounts (known locally as APVs) and to this end offered tax incentives.

At the end of March, the AFPs still dominated the voluntary retirement market with a 71.1% share of the industry's total assets of US$416mn. When the APV business kicked off the AFPs seized a market share of above 80%, but that has since declined mainly to the benefit of mutual funds and insurance companies, Paloma said.

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Insurance companies and mutual funds had 13.8% and 13.5%, respectively of the APV market as of March 31.

Paloma said he is confident that the local mutual fund industry - and insurance companies - will continue to gain APV market share from the AFPs.

Increased awareness among the Chilean public that non-AFP players offer APVs and more flexibility in the conditions for changing APV plans are factors that favor greater mutual fund participation in the future, he said.