The fourth session of the Financial Committee was held on Friday, June 19, 2020. The Committee met with Nomura representatives, entity responsible for investing part of the investment portfolio of the Pension Reserve Fund (PRF). This meeting was held by videoconference and as part of the external managers’ annual presentations to the Committee.
First, Nomura introduced its organization, investment process, and the main results obtained managing the High-Yield bond mandate during 2019 and the first half of 2020. At the request of the Committee, Nomura provided additional information on its investment philosophy and the factors that have influenced its performance. In addition, Nomura analyzed the current situation of the markets, highlighting the Covid-19 pandemic effects. The members of the Financial Committee appreciated Nomura's willingness to clarify their inquiries.
Then, Budget Office’s representatives presented the analysis of the impact that an exchange-rate hedging strategy for the PRF could eventually have on fiscal and budgetary accounting. After exchanging opinions, the Financial Committee appreciated the presentation.
Finally, the Financial Committee had a discussion on the significant withdrawals that the PRF will experience in the next two years. These withdrawals are part of the recent legal modifications that were approved by Congress to support the fiscal situation in the context of the pandemic and its effects on the economy. In this context, the Minister of Finance decided not to move forward with the plan of converging to the investment policy approved at the end of 2017. Consequently, the Committee recommended investing the expected withdrawals during 2020 and 2021 in a more conservative portfolio and maintaining the current strategic asset allocation for the rest of the fund.
External and autonomous, the Financial Committee is made up of professional and experienced experts: José De Gregorio (president), Cristián Eyzaguirre (vice president), Ricardo Budinich, Jaime Casassus, Martín Costabal and Paulina Yazigi.