Chilean regulator to put new limits on pension fund investments

SANTIAGO Tue Nov 6, 2012 11:05am EST

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SANTIAGO Nov 6 (Reuters) - Chile's private pension funds will have new limits placed on their investments, in a move to diversify risk, the pension funds' regulator said on Tuesday.

The new limits on pension funds' investments, set to take effect in January, are not expected to impact current investment portfolios, the regulator said.

"This has been under discussion for two months ... a study showed that the pension funds weren't breeching these new investment limits," said Ramon Lagos, analyst with Banco Penta in Santiago. "In theory there shouldn't be complications."

The pension funds - Chile's biggest institutional investors - will have their investments in company and bank shares reduced to a range of 1 percent to 3 percent of the individual fund's value, from a current 5 percent limit.

They will also have the maximum amount of investments in domestic bank instruments reduced to 9 percent of an individual fund's value, from a current 11 percent.

Additionally, the limit for investments in private and state-owned company bonds will be reduced to 3 percent of a fund's value, from a current 5 percent.

Chile's six pension fund administrators, which had assets under management of around $159 billion at the end of September, manage five types of funds with varying levels of risk.

($1 = 470.48 pesos at the end of September) (Reporting by Anthony Esposito and Moises Avila; Editing by Tim Dobbyn)