UPDATE 2-Chile says $17 bln state funds eyeing equities, bonds
(Adds official decision in coming weeks)
LONDON, March 13 (Reuters) - Chile's two state investment funds, worth over $17 billion, are looking to diversify into equities and corporate bonds and reduce their holdings in money market instruments, a Chilean finance ministry official said on Thursday.
Eric Parrado, International Finance Coordinator at Chile's Ministry of Finance, said the country would seek external fund managers for the funds' equities and corporate bond investments.
"We are in transition to a new strategy, not only in terms of assets but also institutional arrangements," Parrado said at a London conference on sovereign wealth funds.
The finance ministry has accepted recommendations by a government-appointed advisory panel, including a proposal that Chile's Reserve Pension Fund (FRP), which has about $1.6 billion in assets, and its $15.5-billion Social and Economic Stabilisation Fund (FEES) put about 15 percent of their combined portfolios in equities and about 20 percent in corporate bonds by the end of this year, Parrado said.
"The idea is to outsource this 35 percent to fund managers," Parrado said, adding that the finance ministry would make a formal decision in the coming weeks.
The funds' traditional allocation of about 30 percent money market instruments will be reduced to 5 percent but their majority allocation to sovereign bonds would remain unchanged. (Reporting by Sebastian Tong, editing by David Christian-Edwards)
