Room to Expand

Sep 1, 2011

Peru’s pension system is growing exponentially, leaving managers scrambling for investment options. Infrastructure investments, foreign assets and a deeper equity market may help.

by Lucien Chauvin

Assets under management in the Peruvian pension system have almost doubled in the last three years and could increase by another 67% over the next two years as the middle class swells on the back of the country’s recent economic boom and fears over newly elected President Ollanta Humala start to fade.

But with limited investment options at home, fund managers are placing their hopes on infrastructure investments, the new integrated Andean equity market (MILA) and regulatory changes that allow them to buy more foreign assets.

Shopping centers are not typically associated with retirement plans, but Peru’s fast growing retail sector is one of the best signs for the country’s private pension funds that they will be seeing significant changes in the coming years.

The spread of shopping centers is an indicator that there is a growing middle class, especially in the provinces. They...

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