The Financial Committee met for the fifth time this year on Friday, August 14th, holding the session by videoconference. On this occasion, the Committee met with a delegation from Allianz Global Investors (Allianz), an external manager in charge of investing part of the Pension Reserve Fund’s corporate bonds exposure. This instance is part of the annual presentation that each manager provides to the Committee to provide an update on their management.
In its presentation, Allianz described its organization, strategy, investment team, and reported the results obtained during 2019 and the first half of the current calendar year. The delegation also presented about the fixed income market, with special emphasis on the measures that have been adopted to face the effects derived from Covid-19. The Committee expressed its satisfaction with the presentation and the firm’s administration.
Next, the Central Bank of Chile, in its role as Fiscal Agent, presented the results of the selection process for external managers of corporate bonds and equities for the Pension Reserve Fund. It should be noted that this process was carried out based on the request of the Ministry of Finance, taking into account the period since the managers of those portfolios were hired. Accordingly, the Central Bank of Chile proposed to the Financial Committee three finalists for each asset class. This selection was made based on the score obtained as a result of weighting the responses of a Request for Proposal process, a round of interviews conducted by personnel from the bank, the Ministry of Finance, and the consulting firm, RVK, and the due diligence analysis carried out by the latter. After a series of questions and answers about the selection process, the finalist firms, and their investment strategies, the Financial Committee indicated that had no objections regarding the proposal and thanked the Central Bank of Chile on their work. In this context, the latter informed the members of the Committee that the next stage of the selection process is the opening of offers provided by the finalist companies, where the two firms that charge the lowest fees will be selected. The Central Bank of Chile informed the Committee that it expects to communicate the results of the process to the selected companies during August 2020.
Subsequently, RVK presented the pros and cons of passive and enhanced passive and active management styles for global high yield bonds in the context of the strategies followed by the external managers: BlackRock and Nomura. The members of the Committee agreed with the conclusions of the consulting firm and appreciated its presentation.
Finally, the Technical Secretariat reported that, following the recommendation made by the Committee in the previous meeting, the new investment guidelines of the Pension Reserve Fund are currently being processed, incorporating a more conservative portfolio for the resources coming from the expected disbursements in years 2020 and 2021, investing the remainder according to the current strategic asset allocation.
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.