CHILE Trends and Developments Contributed by: Felipe Díaz Toro, Victor Riadi and Ignacio Ruiz Rodríguez, EDN Abogados
and third quarters of 2024, reflecting low job creation, the real depreciation of the Chilean peso, and persistently pessimistic expectations. AuM and investor growth During the first quarter of 2024, the assets under management (AuM) of public investment funds reached CLP35,753 billion, reflecting a quarterly growth of 7.5% and a 19.8% increase over the past 12 months. According to the latest report published by ACAFI, when measured in dollars, AuM stood at USD33,894 million, representing a quarterly decline of 3.2% and an annual decrease of 3.6% compared to the first quarter of 2023. This decline was primarily attributed to the apprecia - tion of the exchange rate, which saw annual growth of 24.3%, closing the period at 982 CLP/ USD compared to 790 CLP/USD at the end of the first quarter of 2023. The Central Bank of Chile reported that dur - ing the first three months of the year, 19 new funds were created, totalling USD100 million (CLPM98,000). However, these were surpassed in value by the liquidation of ten funds, amount - ing to USD107 million (CLPM105,000). In the third quarter of 2024, the current account registered a deficit of USD3.14 billion, equiva - lent to 3.9% of GDP. On an annualised basis, this represented 2.7% of GDP. The deficit was driven by the negative balance in income and the services trade balance, partially offset by a sur - plus in the goods trade balance. Meanwhile, the financial account recorded net capital inflows of USD4.26 billion, primarily led by foreign direct investment in Chile. Lastly, as of the end of September, the net inter - national investment position increased its debit
balance compared to the previous quarter, reach - ing USD64.24 billion. This movement was mainly attributed to transactions in the financial account. Trends in alternative investments According to the Chilean Superintendency of Pensions (SP), as of March 2024, pension funds had an average investment in alternative assets equivalent to 10.1% of the total value of the Pen - sion System Funds. This consisted of 6.2% in effective investments and 3.9% in pledges and commitments. Regarding the composition of current invest - ments in alternative assets, 9% corresponded to domestic investments, while 91% were allo - cated internationally. The international portfolio was further divided into 66% in private equity, 18% in private debt, and 16% in infrastructure and real estate assets. Additionally, on 11 April 2024, at the request of the SP, the structural limit for alternative asset investments was increased through Central Bank Resolution 2633-01-240411. Following this, on 15 April 2024, the Central Bank of Chile announced an expansion of investment limits for alternative assets within pension funds, creat - ing an additional investment capacity of approxi - mately USD6 billion. This increase, aimed at enhancing the profitability of pension funds, will be implemented gradually. The decision fol - lowed a recommendation from the Chilean Pen - sions Supervisor to improve fund returns, which the Central Bank has now realised. In terms of trends in alternative investments dur - ing 2024, Dave Goodsell, Managing Director at Natixis, noted that while the environment for growth in these assets remains positive, 59% of institutional investors expressed concerns that the rising popularity of private equity is making
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