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Friday, November 16 de 2018

The Finance Minister, Felipe Larraín, authorizes the hiring of new external managers for the Pension Reserve Fund

The Minister of Finance authorized the Central Bank of Chile, in its role as Fiscal Agent, to hire the new companies that will be responsible for investing part of the resources of the Pension Reserve Fund, specifically the portfolios of High Yield Bonds and Mortgage Backed Bonds of US Agencies (MBS). These new asset classes are part of the changes to the investment policy that were approved by the Finance Minister in November 2017.

It is important to mention that these companies were chosen through a selection process that was carried out by the Central Bank of Chile, with the advice of the consulting firm RVK, Inc., during 2018, following the best international practices.

In particular, the Minister of Finance accepted the Central Bank of Chile’s recommendation to hire BNP Paribas Asset Management USA Inc. and Western Asset Management Company, LLC for managing the Mortgage Backed Bonds of US Agencies (MBS) mandates.  Also, the Minister authorized hiring BlackRock Institutional Trust Company, N.A. and Nomura Corporate Research and Asset Management Inc. for managing the High yield Bonds mandates.

The Minister of Finance thanked the Central Bank of Chile for its efforts in the selection process of external managers for the new asset classes of the Pension Reserve Fund and commended the high level of professionalism observed in its recommendations and the quality of the credentials of all the firms that were selected.

 

According to the plan, investments in these asset classes are expected to begin during the beginning of 2019. The next stage of implementation of the new investment policy of the Pension Reserve Fund will consist in the selection of external managers for the real estate sector and the currency hedging strategy. During this time the equity share will gradually increase in order to converge to the new strategic asset allocation at the beginning of 2021.

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