Mexican Bank Executive Sees Big Growth In Mutual Funds
November 24 2009 - 2:01PM
Dow Jones News
Mexico's largest bank, BBVA Bancomer, sees the local mutual fund
industry growing at an accelerated pace in the next three years as
low interest rates spur retail investors to swap traditional
savings accounts for higher-yielding funds.
"The number [of people] invested in funds doesn't exceed 1.7
million. The banking industry probably has about 14 million clients
that save," said Jorge Perez Samano, head of asset management at
BBVA Bancomer, during a press conference.
Perez Samano said he expects the mutual fund industry could see
780 billion pesos ($60.3 billion) in additional assets under
management by the end of 2012.
"We also believe that the current level of interest rates will
lead investors to seek better investments and funds are almost
always a great investment option," said Perez Samano, who oversees
about MXN202 billion in mutual fund assets.
The industry is already enjoying expansion, thanks to low
interest rates and stable financial markets.
Mutual fund assets reached MXN954.49 billion at the end of
October, a 12.5% increase from MXN848.65 billion a year earlier,
according to securities industry association AMIB.
Mutual funds make up Mexico's second-largest institutional
investor group after the compulsory retirement savings system,
which had MXN1.106 trillion in assets under management last
month.
Mutual fund assets fell 7.9% year-on-year to MXN790.28 billion
at the end of 2008 largely due to outflows and market volatility as
the global financial crisis intensified during the fourth
quarter.
The rally observed in fixed-income and equity markets since
March has lured back traditionally risk-averse Mexican retail
investors.
"What we at Bancomer have observed is that after going to very
short-term funds, clients returned to longer-term funds with
greater yields once the worst of the volatility was over," Perez
Samano said.
The Bank of Mexico has kept the overnight lending rate unchanged
at 4.5% since July, after cutting by 375 basis points in the first
seven months of the year in response to the country's deepest
recession since the 1995 peso crisis.
However, economists expect the central bank to hike the
benchmark rate to 5.5% by the end of 2010 to keep a lid on
inflation.
-By Ken Parks, Dow Jones Newswires; 52-55-5980-5177;
ken.parks@dowjones.com
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