Financial Committee meets external manager and consulting firm

Tuesday, april 28, 2020

At its third session of the year, which took place on April 24, 2020, the Financial Committee met by telephone with a delegation from BlackRock, the entity responsible for investing a portion of the investment portfolios of the Economic and Social Stabilization Fund (ESSF) and the Pension Reserve Fund (PRF). This meeting is part of the annual presentations that external managers make to the members of the Committee to account for their management.

On this occasion, BlackRock reported on its organization, investment processes and the main results obtained in 2019 and the first part of 2020 for the equities, corporate bonds and high-yield bonds mandates. Additionally, the manager presented about the markets, with an emphasis on the effects of the Covid-19 pandemic. The members of the Financial Committee thanked BlackRock and expressed their satisfaction with its management.

The consulting firm RVK, Inc. (RVK) made its first presentation on the strategic asset allocation study for the ESSF. On this occasion, members of the Committee and the consulting team discussed the investment objectives of the fund, the currency in which the study should be carried out, the asset classes that should be considered, the methodology to obtain efficient frontier and to estimate the parameters of the model, and the way in which the uncertainty associated with outflows that the fund could face in the future should be incorporated. Furthermore, the Committee recommended extending the deadline for the study in order to better incorporate the potential impact of the current health crisis on the financial assets where the fund could be invested.

Later, the Technical Secretariat of the Financial Committee informed the members regarding the recent legal modifications that have been approved as part of the measures announced by the Government to face the economic effects derived from the health crisis and that have implications for Sovereign Wealth Funds.

Finally, the Technical Secretariat presented the results of the Request for Information process that was carried out by the Central Bank of Chile, in its role as Fiscal Agent, to select external managers for equities and corporate bonds in the PRF. In addition, main results of both Sovereign Wealth Funds in 2020 were presented.

External and autonomous, the Financial Committee is made up of professional experts with extensive experience: José De Gregorio (president), Cristián Eyzaguirre (vice president), Ricardo Budinich, Jaime Casassus, Martín Costabal and Paulina Yazigi.

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