The research puts total AuM for the four administradoras de fondos de pensiones (AFP/Afore) systems at $574bn at the close of 2019. Including Brazil’s complementary pension system, which also had a positive year, total regional AuM stands at $1.05trn.

Flows into the AFP/Afore pension managers in Chile, Mexico, Colombia, and Peru reflect a gradual upward trend that mimics increasing formality in labor markets and higher salaries. The inflows are also among the most reliable in Latin America.

While cross-border mutual funds were the clear winners in 2019—adding $11.7bn in total allocations to end the year at $87bn—exchange-traded funds (ETFs) are steadily accumulating assets.”

“Contributions into AFP/Afore systems of Mexico, Colombia, Chile, and Peru are obligatory and deducted directly from worker paychecks,” according to Thomas Ciampi, director of Latin Asset Management, Cerulli’s Latin American research partner.

“For cross-border managers, they represent opportunity for strategic expansion.” While cross-border mutual funds were the clear winners in 2019—adding $11.7bn in total allocations to end the year at $87bn—exchange-traded funds (ETFs) are steadily accumulating assets. At year end, assets gained more than $8bn from the year before. The research projects demand in cross-border securities to remain strong, with gains of 12%-13%, compared to 8% for domestic vehicles. By 2024, the securities could reach 21% of the industry total.

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