Afore Sura to adopt defensive investment stance amid volatility
Mexican private pension fund manager Afore Sura informed its more than 7mn clients that it would be taking defensive measures in face of events that could have an impact on investment yields.
In a memo sent on Saturday, the firm said, "As a result of this behavior, we have adopted a more defensive posture in our portfolios, investing in assets that are more adequate for an adverse environment."
Afore Sura stressed that all of its investments are long-term oriented, and that "even though there may be impairments in circumstantial situations, the long-term yields of the Afores have been very positive.
The risks singled out by the fund manager are the following:
- Global trade tensions that have affected the expectations for inflation and the upside risks to prices on goods and services.
- Doubts about economic growth moving forward, given the performance seen with investments in traditional sectors this year.
- Expectations that the [US] Republican Party could lose the lower house in the mid-term US elections.
- Changes in monetary policy at various central banks, raising their interest rates and reducing liquidity that had been injected into the markets.
- The recent referendum on the new international airport in Mexico City, which generated serious doubts about the politics to follow with the incoming administration of president-elect Andrés Manuel López Obrador (AMLO).
The last risk referred to a non-binding referendum, a citizen consultation carried out in late October that came out in favor of the cancellation of the new Mexico City airport project (NAIM).
Several of Mexico's pension fund managers (Afores) had invested in NAIM and trade group Amafore came out last week to calm potential fears regarding those investments, saying they are small compared to the Afore industry's total investments and that the funds in question would ultimately be covered by eventual income from airport use taxes (TUAs), regardless of the cancellation.
Afore Sura said its investment in NAIM represents less than 1% of its investment portfolio. The firm is the fourth largest pension fund manager of the 10 that are operating in Mexico, with over 440bn pesos (US$22bn) in assets under management.
AMLO takes office on December 1.
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