Chile's Top Pension Funds Posted -2.0% Average Return In Sept

The largest group of funds managed by Chile's private pension-fund managers, or AFPs, averaged a real, non-annualized return of -2.0% in September, government regulator SAFP said Tuesday.

All pension funds, including the heavily weighted C-fund, slumped in September as increasing concerns about the euro zone's sovereign-debt troubles and anemic global growth dragged equities markets in Chile and abroad sharply lower.

Overall, the AFP funds held $132.66 billion at the end of September, down 1.3% on the year.

The largest fund, which is known in Chile as the Type C-fund and includes both fixed-income and equity instruments, holds some 41% of all AFP funds.

Of the C-fund's holdings, 30.3%, or $16.47 billion, was invested abroad at the end of September.

Late last year, the central bank moved to gradually increase the cap on the AFP funds' foreign investments to 80% from a 60% limit.

On Dec. 1, the limit was raised to 65%, to 70% on March 1, to 75% on June 1, and to 80% on Sept. 1.

The move was likely intended to increase the outflow of dollars from the local market in a bid to weaken the Chilean peso, which at the time was trading near three-year highs versus the dollar. In recent weeks, the peso has weakened to more than a one-year low as international copper prices slumped on growing worries about a European sovereign-debt contagion and continued signs of slowing global growth.

The pension-fund managers also offer four other account types, which invest in equity and fixed-income instruments to varying degrees, with contributors close to retirement age investing in less-risky funds heavy on fixed income.

Among individual funds, AFPs had a total $24.37 billion invested in the highest-risk A Funds as of Sept. 30; $24.68 billion in B Funds; $54.38 billion in mid-risk C Funds; $19.56 billion in D Funds; and $9.68 billion in the lowest-risk E Funds.

At the end of September, AFP Provida SA (PVD, PROVIDA.SN) managed the largest portfolio, with $38.80 billion under management, down 3.8% on the year, the regulator said. Provida is 51.6% owned by Spanish bank Banco Bilbao Vizcaya Argentaria SA (BBVA, BBVA.MC).

AFP Habitat (HABITAT.SN), Chile's second-biggest AFP with $33.58 billion under management, increased 0.1% on the year in terms of holdings.

Number three AFP Capital managed $29.24 billion at the end of September, down 2.4% on the year. Capital was created in 2008 after Dutch banking group ING Groep NV (ING, INGA.AE) bought Banco Santander SA's (STD, SAN.MC) AFP Bansander and merged it with its AFP Santa Maria.

AFPs are key investors in Chilean equity and fixed-income markets.

-By Anthony Esposito, Dow Jones Newswires; 56-2-715-8929; anthony.esposito@dowjones.com

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