SANTIAGO (Dow Jones) -- The largest group of funds managed by Chile's private pension-fund managers, or AFPs, averaged a real return of -3.9% in 2011, government regulator SAFP said Friday.

Chile's pension funds had a mixed year as the three riskiest of the five types of funds saw negative returns, but the two more conservative funds posted small but positive returns.

Overall, the AFP funds held 70.38 trillion Chilean pesos ($137.7 billion) at the end of 2011, up 1.2% from the end of the previous 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.

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.

The riskiest A fund, which heavily invested in local and overseas stocks, averaged a return of -11.3% in 2011, while the most conservative E-fund, which is mostly invested in local fixed-income, returned 4.3% in 2011.

AFPs held 63.6% of their holdings in domestic investments and the other 36.4% in investments abroad.

Of the C fund's holdings, 31.6%, or CLP9.02 trillion, was invested abroad at the end of the year.

In 2010, the central bank moved to gradually increase the cap on the AFP funds' foreign investments to 80% from a 60% limit.

The move was intended to increase the outflow of dollars from the local market in a bid to weaken the Chilean peso, which that year was trading near three-year highs versus the dollar.

Since then, the peso has lost ground in line with many emerging-market currencies around the world amid jitters over Europe's sovereign-debt crisis.

Among individual funds, AFPs had a total CLP12.87 trillion invested in the highest-risk A funds at the end of 2011; CLP13.0 trillion in B funds; CLP28.5 trillion in mid-risk C funds; CLP10.45 trillion in D funds; and CLP5.57 trillion in the lowest-risk E funds.

At the end of 2011, AFP Provida SA (PVD, PROVIDA.SN) managed the largest portfolio, with CLP20.38 trillion under management, down 1.4% 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 CLP17.89 trillion under management, grew 2.7% on the year in terms of holdings.

The third-largest, AFP Capital, managed CLP15.49 trillion at the end of the year, down 0.1% on the year.

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

-By Carolina Pica, Dow Jones Newswires; 56-2-715-8919; carolina.pica@dowjones.com

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