Peru's Private Pension Funds Want Higher External Investment Limit

   By Ryan Dube 

LIMA, Peru--Peru's private pension-fund managers would like to see the Central Reserve Bank of Peru be more aggressive in raising the limit on how much they can invest abroad.

Earlier this year, the central bank increased the limit that the private pension funds, known as AFPs, can invest outside Peru to 32% of total assets under management from 30%.

The move was in part aimed at easing appreciation pressures on Peru's sol, which strengthened 5.4% against the U.S. dollar in 2012.

Central bank President Julio Velarde said recently that there could be further increases to the limit this year.

The head of Peru's private pension-fund association, Luis Valdivieso, said that the increase was good, but too "timid."

Mr. Valdivieso said during a news conference on Thursday that he would like to see further increases, which could improve the returns on investments and lower risks for pension-fund holders.

"With more diversification, we have less risks," he said. "There aren't enough financial instruments for AFPs to invest in [Peru]."

There are currently four private pension-fund managers in Peru.

Over the past 10 years, the AFPs' assets under management have soared as Peru's economy posts strong growth.

The AFPs now manage slightly more than 100 billion soles ($38.79 billion), compared to PEN22.1 billion in 2003 and PEN87.3 billion in 2010.

"We hope that this trend continues," Mr Valdivieso said.

AFP Horizonte SA (HORIZC1.VL) is owned mainly by Holding Continental and Spain's Banco Bilbao Vizcaya Argentaria SA. (BBVA, BBVA.MC)

Of the pension funds, AFP Integra SA (INTEGRC1.VL) is owned by Colombia's Grupo de Inversiones Suramericana SA. (GIVSY, GRUPOSURA.BO). AFP Profuturo's main shareholder is a unit of Bank of Nova Scotia,(BNS, BNS.T) while Prima AFP is controlled by Peru's Credicorp Ltd. (BAP, BAP.VL).

Chile's Habitat is in the process of running an AFP in Peru.

   Write to Ryan Dube at [e-mail]