Peru's Largest Pension Raises Investment in Emerging Markets

(May 3, 2010) — AFP Integra SA, Peru’s largest private equity pension fund, plans to raise its investment abroad in emerging markets, should the central bank increase its overseas holdings limit.

“We’re growing much quicker than the alternatives for investment locally,” de las Casas said to Bloomberg. “We want to diversify our portfolio and emerging markets look promising.”

According to the news service, Integra has upped its proportion of investments in foreign assets to 24% from 20% at the end of March as the global economy rebounds.

Greater returns on investment by Peru’s four pension funds, which manage $25 billion, have caused them to seek an increase in the limit on their oversees investments.

The funds had 21% of their assets abroad as of March 31, up from 14% a year earlier, according to Bloomberg. Currently, 24% in overseas holding is the limit for private pension funds set by Peru’s central bank, but the central bank is poised to raise the cap on foreign investments to 26%, with foreign assets potentially climbing to 50% of the funds’ total investments.

Growth in emerging markets and developing countries is projected to be above 6.25% a year, following a growth of only 2.5% last year. The governments of many developing countries are working at maintaining a balance between domestic growth and moderating the inflows from investors abroad, which could contribute to inflation, the Financial Times reported.