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Regulatory changes lead Afores to shift investments toward equity (Mexico)

Following adjustments in investment rules by Mexico's regulatory authorities, the country's private sector pension managers - known as Afores - shifted more of their portfolios into equity and structured finance in 2010, according to a report on the industry from Fitch.

The percentage of assets under management (AUM) that the Afores invested in equities outside Mexico rose to 9.1% at the end of 2010, from 4% at end-2009. Likewise, investments in structured finance vehicles rose to 2.4%, from 1.2% of AUM in 2009.

The Fitch report noted that the latter shift was thanks to a combination of government initiatives to encourage infrastructure investment and new rules allowing Afores to increase investment in local securities.

The ratings agency warned, however, that the shift into riskier equity and structured finance investments could have an impact on the Afores' credit ratings down the line.

The country's Afores ended 2010 with 1.39tn pesos (US$115bn) in AUM, up 20.3% from the year before.

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