Chile gives pension funds more firepower as virus batters growth
Chile’s Central Bank agreed on Wednesday to increase the maximum investment limits on alternative assets for four of the country’s five public pension funds as it seeks to contain the impact of the coronavirus health crisis on the economy.
The bank said in a statement that the move was designed to allow for “diversification of the pension fund portfolios … to access better combinations of risk and return.” The potential to extend the funds’ investments could provide a welcome boost for Chilean stocks, which have followed global bourses south amid the new coronavirus outbreak and global economic disruption.
Chilean pension funds, which are 60% locally invested, have also seen billions wiped off their value in the turmoil. At the end of March, Chilean pensions’ assets under management were $171 billion, down from $215 bln at the end of 2019.
Although the bank has the legal right to extend investment limits by between 5% and 15% of the value of the fund, it opted to keep them below the maximum level of that range, it said.
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