Looking Abroad

Dec 8, 2003

Mexico’s pension fund managers soon will be able to invest overseas. Debaters at a LatinFinance conference in November looked to the future of offshore investing.

T here are not many free lunches up for grabs anywhere, least of all in financial markets. However, as Rodrigo Alamos, a partner at Capital Advisors in Chile, points out, "The only free lunch that exists is diversification." Put simply, international diversification delivers lower risk and greater yields for fund managers than a strictly domestic investment portfolio can achieve. Mexico’s Afores, or privately managed pension funds, should soon be allowed to invest part of their $35.37 billion in assets under management in foreign markets. It may seem strange for a developing country like Mexico to export capital, yet doing so makes perfect sense for fund managers with a fiduciary duty to their future retirees by seeking out the best returns for the lowest risk. Says Carlos Kretschmer, investment director, at Afore Allianz Dresdner, "It is important to diversify globally because you never know what will happen in this country. We are investing for the long term, for 40-45 years." ...

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