Colombian Pension Funds Slow to Change

Changes announced last week by Colombian regulators to rules governing pension funds are likely to have only a gradual impact, owing to strength in domestic markets. The Superintendencia Financiera announced last week a long-awaited increase in equity investment limits – to 40% from 30% – and on investment in international securities, to 40% from 20%. “This is a very good sign,” Felipe Gaviria, VP in asset management at Santander Colombia, tells LatinFinance. “It’s always good to be able to expand your portfolio. However, the impact will be minimal at first.” Gaviria explains that attractive prices in local bonds and equities will prevent pension fund managers selling significant amounts to buy foreign securities. In the long term, though, there will likely be some increase in international assets. Investment of up to 5% in local and offshore private equity funds is also now permitted, subject to certain rules. Although pension funds may invest in infrastructure projects – which Gaviria says are a good long-term investment – via PE, he would like them to be able to make direct equity investments.