The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site.

All material subject to strictly enforced copyright laws. © 2020 Euromoney, a part of the Euromoney Institutional Investor PLC.

Mexico pension funds: High pension fund commissions lead to anaemic returns

Latin American markets have proved to be a fine investment in recent years, although not, it seems, for Mexican private pension fund managers. Pension funds, afores as they are locally known, are coming under increasing scrutiny for failing to provide the kind of stellar returns posted in Chile and Peru, despite new freedoms to diversify investments.

Many blame artificially high commissions, an ailment afflicting much of Mexico’s financial system. Mexican funds, which manage some $65 billion – making them the country’s biggest institutional investor – generated an annual real return of 8% over the past decade. However, sector regulator Consar says investors see only about half of that because of the commissions. That compares with a 17% return in Chile’s private pension system in 2006. Peru’s top-performing pension fund, Prima, generated returns of between 18% and 30% with two of its portfolios last year. Mexico’s competition commission says the high fees charged by afores have almost wiped out the funds’ hard-won gains since 1997.

Take out a complimentary trial

Take out a 7 day trial to gain unlimited access to Euromoney.com and Asiamoney.com analysis and receive expertly-curated updates direct to your inbox.

 

Already a user?

Login now

 

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree