Association: Mutual funds bet on pension product

Chilean mutual fund companies are betting strongly on future sales of the local complementary pension product APV, the general manager of Chile's mutual fund association, Jorge Palomas told BNamericas. In March last year, the Chilean government authorized a broad variety of financial institutions such as mutual funds, pension fund managers, insurance companies, banks and brokerages to offer the APV to the Chilean public. The APV comes with tax-breaks and was designed to boost pension savings in Chile. Although the APV accounts still represent a small part of the mutual fund's assets under management, the industry sees it as a product with strong growth potential as the Chilean public is increasingly opting for medium-and long-term investment alternatives, Palomas said. In terms of total APV accounts, the mutual fund industry administered 4.3% of the accounts at the end of June this year, while Chile's pension funds dominated with 90.4% of the accounts. At the end of June, APV accounts represented 5.2% of the 6.8 million affiliates within Chile's private pension system, which is mandatory. Palomas said he foresees a trend in the local mutual fund industry where companies specialize in niches and he believes the APV is one potential niche for some mutual fund companies. In Chile there are 17 mutual fund companies with some 390,000 clients and US$6.4bn in assets under management. The Chilean mutual fund industry is dominated by banks with a trend towards more non-banking players, such as insurance companies, entering the market.