The Financial Committee meets for the fifth time this year

Thursday, september 12, 2019

The Financial Committee of Sovereign Wealth Funds (FC) met for the fifth time this year on Friday September 6th, 2019 to analyze different aspects of the management of the Sovereign Wealth Funds. The General Treasurer of the Republic, Ximena Hernandez Garrido, also attended the meeting. 

In this opportunity, the FC deepened the analysis on the methodology used to calculate a risk measurement (tracking error ex-ante) which is used to limit the flexibility that is given to external managers to invest the resources of the Sovereign Wealth Funds. Additionally, the FC analyzed the reconciliation between custody and external managers returns, and preliminary discussed the procedure that could be utilized if there were differences. Those topics were presented by J.P. Morgan – custodian bank of the Sovereign Wealth Funds – and the consulting firm RVK Inc., respectively. The FC members expressed their appreciation to for the presentations.

Afterwards, the FC analyzed different alternatives utilized by institutional investors to incorporate Responsible Investment (RI) in their investment processes, in accordance with Minister of Finance’s request to the President of the FC regarding evaluating and recommending alternatives to eventually incorporate environmental, social and governance (ESG) considerations in the investment process of the Sovereign Wealth Funds. Members exchanged views and requested the Technical Secretariat to prepare specific proposals that will be analyzed by the FC in the future.

Finally, FC members analyzed the main results of both Sovereign Wealth Funds, as well as the composition of their portfolios with respect to their benchmarks.

The FC—an external, independent committee—is made up of the following six experienced professionals and experts: Jose De Gregorio (President), Cristian Eyzaguirre (Vice President), Ricardo Budinich, Jaime Casassus, Martín Costabal and Paulina Yazigi.

 

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