Snapshot: How Chile's AFPs performed in September

Six private pension fund managers, or AFPs as they are known, operate in Chile.

Each AFP manages five individual funds - A, B, C, D and E - which their affiliates can choose from, with A being the highest risk and E the lowest.

Combined assets under management of the AFPs grew 10.1% in the 12 months through September to 128.060tn pesos (US$204.616bn), sector regulator SP said in a report.

Of the total, 58.8% was invested in the national market, with the rest invested abroad. About 44% of AUM was invested in fixed-income instruments.

Fund A grew the most, by 28.9% to 17.990tn pesos, followed by fund B which increased 19.9% to 19.864tn pesos. Fund C grew 13.0% to 46.387tn pesos and fund D 7.4% to 21.634tn pesos, while fund E contracted 10.1% to 22.183tn pesos.

From October 31, AFPs can invest in alternative assets such as non-residential real estate and concessions. Lawmakers hope the move will lead to higher long-term investment returns.

Natan Melnick, CEO of Santiago-based business valuation consultancy Valorus, has said the move should lead to portfolio diversification and an increase in returns.

"The reality is that the returns of all AFPs tend to be similar," he said earlier this month. "This is because they tend to follow each other in terms of investment policy which generates a herding effect. This phenomenon is expected, considering that if one fund manager makes a mistake with an investment and obtains returns significantly lower than that of the other players, it could suffer considerable damage to its reputation.

"This initiative will bring about change in the industry since, for example, an unlisted company may not want to sell shares to two different AFPs. And even if it wants to do it, the price of the company will have been changed because of the previous transaction."

The government is also trying to reform the pension system to address issues such as small pensions - a hot topic in the country.

AFP LEAGUE TABLE BY ASSETS

No. 1

AFP Habitat. The company, which has recently been at loggerheads with SP, is controlled by Chilean construction chamber CChC through its subsidiary Inversiones La Construcción.

AUM: 34.998tn pesos.

Average returns on fund C from October 2016-September 2017: 8.26%

No.2

AFP ProVida. US financial services giant MetLife acquired Spanish bank BBVA's 64% stake in Provida for US$1.45bn in 2013.

AUM: 32.457tn pesos

Average returns on fund C from October 2016-September 2017: 7.25%

No. 3

AFP Cuprum is a member of US-based Principal Financial Group. A merger between AFP Cuprum and former player AFP Argentum, both controlled by Principal, drew criticism in 2015.

AUM: 25.138tn pesos

Average returns on fund C from October 2016-September 2017: 8.10%

No. 4

AFP Capital. The company was acquired by Colombian financial services holding Sura in 2011 as part of the latter's deal to purchase Dutch group ING's pension, insurance and investment management units in Latin America.

AUM: 24.919tn pesos

Average returns on fund C from October 2016-September 2017: 8.26%

No. 5

AFP Modelo began operating in 2010 after being awarded a contract to act as the AFP for new members entering the system. AFP Modelo's controller is the Chilean systems integrator Sonda, through its subsidiary Inversiones Atlántico Limitada.

AUM: 6.159tn pesos

Average returns on fund C from October 2016-September 2017: 8.47%

No. 6

AFP PlanVital is controlled by Chilean company Inversiones Los Olmos, which, in turn is controlled by British Virgin Islands-registered Atacama Investments. Atacama is controlled by Swiss private bank BSI, which was acquired by Brazil's BTG Pactual in 2014 from Italian insurance group Generali. In 2016 Swiss-based global private banking group EFG International bought BSI from BTG Pactual.

AUM: 4.386tn pesos

Average returns on fund C from October 2016-September 2017: 7.72%