Mexico’s pension funds will increase allocations to private equity, credit and other alternative assets with new rules passed by Consar, the regulator that oversees the funds.
Net assets managed by these funds (AFOREs) have grown threefold over the past decade, reaching 7.5 trillion pesos (about $409 billion) as of June. Under new rules, AFOES can now allocate up to 30 percent of their portfolios to alternative assets, a major increase from the previous cap of less than 10 percent, opening the door to broader diversification strategies, Bloomberg reported.
Alternative assets—historically a small share of Afore portfolios—are gaining traction due to their potential for higher returns. Afore SURA, one of Mexico’s largest pension funds with 1.3 trillion pesos under management, is already investing in international private equity and domestic private credit, real estate, and infrastructure. Afore Coppel also sees alternatives playing a growing role in portfolio construction, especially private credit, which it views as offering strong demand and reliable risk-adjusted returns.