
Investment losses drag down pension AUM growth in Mexico

Mexico's pension regulator (Consar) reported that at the end of 2018, the total assets held in the retirement system (SAR) stood at 3.33tn pesos (US$175bn), a modest 0.2% increase from year-end 2017, representing 14.3% of GDP.
The report indicated a nominal yield on investments by pension fund managers (Afores) at 0.8%; however, in real terms the actual yield came to a 3.9% loss.
The loss came in a year marked by a series of global market shocks as well as a deep hit from the decision to cancel Mexico City's partly built international airport in late October, contributing to a 132bn-peso loss for Afores in that month.
The average annual yield on investments in the system from the start of the Afore system in 1997 until 2018 was a nominal 10.93%, or 5.03% in real terms.
The latest yield data stands in contrast to the data for 2017, which was a record year with an average yield of 9.85% and an average 1997-2017 yield of 5.48%.
At the end of last year there were 62.9mn individual retirement accounts in SAR, a 4.8% year-on-year increase.
Despite the difficult year, Consar noted that voluntary contributions to Afores grew 13.6% last year in real terms to 68.6bn pesos at the end of 2018.
Afore investments in 2018
Afores' financing for Mexican companies of different sizes and sectors of economic activity amounted to 1.17tn pesos at the end of 2018.
Even though changes to regulations at the start of the year opened the door to a wider range of investment vehicles, investments in foreign assets fell 18.9% to 358bn pesos.
The following table uses Consar data to demonstrate the evolution of investment portfolios at Mexico's Afores.
Afore investments in green bonds, however, increased 67.0% to 7.04bn pesos.
Their investments in Mexico's 10-year bonds increased by 67.9bn pesos to 450bn pesos, equivalent to 15.4% of all 10-year bonds on the market. Consar added that Afores held 585bn pesos in local private sector long-term debt.
The Afores' investments in equities shrank 11.6% last year to 666bn pesos.
A Citibanamex analysis on the Afores' performance in 2018, cited Citi strategist for Latin America, Julio Zamora, in stressing that while Afores represent about 15% of Mexico's GDP, "They only have a small portion invested in local equities."
Afore's assets under management invested in the Mexican stock exchange amounted to 201bn pesos, representing about 2.7% of the total market value.
Zamora attributed this to "the low number of shares held by the investing public, which reduces liquidity and represents a significant obstacle for the Afores to invest in local shares."
Pictured: Aerial view of the construction site of Mexico City's cancelled airport, in Texcoco, Mexico state, on November 6, 2018.
Subscribe to the leading business intelligence platform in Latin America with different tools for Providers, Contractors, Operators, Government, Legal, Financial and Insurance industries.
News in: Political Risk & Macro (Mexico)

Mexican aluminum industry opposes US tariffs, cites threat to over 1mn jobs
On February 10, Trump announced a 25% tariff on steel and aluminum imports from the United States starting March 12.

Mexico prepares retaliation to US tariffs amid doubts about their duration
Trump issued a decree, taking effect at midnight on March 4, officially imposing 25% tariffs on imports from Mexico and Canada.
Subscribe to Latin America’s most trusted business intelligence platform.
Other projects
Get key information on thousands of projects in Latin America, from current stage, to capex, related companies, key contacts and more.
- Project: Remodeling of the Azteca Stadium (Azteca Stadium Complex)
- Current stage:
- Updated:
1 day ago
- Project: Puerto Sandino Natural Gas Power Plant
- Current stage:
- Updated:
1 day ago
- Project: Mirasol Solar Park
- Current stage:
- Updated:
1 day ago
- Project: Pampas wind farm
- Current stage:
- Updated:
1 day ago
- Project: San Cristóbal Mine Expansion
- Current stage:
- Updated:
1 day ago
- Project: Dam in the Ninahuisa River basin for water reinforcement of the San Gabán II hydroelectric plant
- Current stage:
- Updated:
1 day ago
- Project: Oriental light corridor - Section 1
- Current stage:
- Updated:
1 day ago
- Project: Wastewater Treatment Plant in Trujillo (WWTP Trujillo)
- Current stage:
- Updated:
1 day ago
- Project: Norte Abierto (ex Caspiche/Cerro Casale)
- Current stage:
- Updated:
1 day ago
- Project: Tunal II Dam
- Current stage:
- Updated:
1 day ago
Other companies
Get key information on thousands of companies in Latin America, from projects, to contacts, shareholders, related news and more.
- Company: Cobra Brasil Serviços, Comunicações e Energia, S.A.  (Grupo Cobra Brasil)
-
Cobra Brasil Serviços, Comunicações e Energia, S.A. (Cobra Brasil), a subsidiary of Grupo Cobra, is a power company engaged in generation and transmission of electricity. It is ...
- Company: Companhia de Geração e Transmissão de Energia Elétrica do Sul do Brasil  (CGT Eletrosul)
-
Eletrosul Centrais Elétricas (Eletrosul) is a privately held mixed ownership Brazilian corporation primarily engaged in the generation and transmission of electricityin the sout...
- Company: Enel Green Power Colombia S.A.S. ESP  (Enel Green Power Colombia)
-
Enel Green Power Colombia (EGPC), a Colombian subsidiary of the renewable energy firm Enel Green Power opened in 2012 in Bogotá, is in charge of the construction of the 86.2-MW ...
- Company: Empresa Portuaria Iquique  (EPI)
-
State-owned Empresa Portuaria Iquique (EPI) engages in the administration, operation and development of the Port of Iquique, in northern Chile's Tarapacá region (I), including t...
- Company: Puerto Lirquén S.A.  (Puerto Lirquén)
-
Puerto Lirquén is a multipurpose terminal used by import and export companies and shipowners. Located in Concepción Bay, in Bío Bío region (VIII), Puerto Lirquén was created in ...