The Financial Committee of Sovereign Wealth Funds (FC) met for the fourth time this year on Friday July 19th, 2019 to deepen the analysis of various aspects related to the currency overlay program that will be implemented in the Pension Reserve Fund (PRF).
It should be recalled that through this program, which is part of the new investment policy for the PRF approved by the Minister of Finance in November 2017, the fixed income portfolio currency exposure will be covered to pesos.
On this opportunity, the FC preliminary analyzed some strategies that could be implemented, as well as their operational implications. In this scenario, the FC requested the Technical Secretariat to provide additional information with a view to evaluating the complexities associated with the implementation and management of this program in more detail.
Also, the Technical Secretariat reported on the status of the new investment policy study for the Economic and Social Stabilization Fund (ESSF). This study has two stages. The first one consists on an analysis of the fund’s fiscal dimension, whose conclusions will allow assessing its investment objective; while the second one consists on the investment policy study and design.
The FC was informed that the first stage of this study is already in its final stage and then discussed the next steps to initiate the second. The results of the final stage will be analyzed by the FC, which will eventually recommend, to the Ministry of Finance, modifications to the ESSF's investment policy.
Finally, FC members analyzed the main results of both Sovereign Wealth Funds, as well as the composition of their portfolios in relation to their benchmarks.
The FC—an external, independent committee—is made up of the following six experienced professionals and experts: Jose De Gregorio (Chairman), Cristian Eyzaguirre (Vice Chair), Ricardo Budinich, Jaime Casassus, Martín Costabal and Paulina Yazigi.