Colombian AFPs dive back into equities in June

Colombian AFP pension managers injected USD 704 million into cross-border funds and ETFs in June, favoring North American, European and emerging-markets equity.

The return to equity came as US-China trade tensions eased, and as investors began to focus on prospects for monetary policy easing to spur economic growth, including in emerging markets.

The S&P 500 index soared 6.9% in the month. The US equity gains, though, came amid a disconcerting global backdrop.

Barclays warned in a June 27 note that global growth prospects have softened as protracted uncertainties over trade relations have dimmed hopes that China would post a modest rebound in economic growth.

The bank sees global growth at 3.3% this year, as well as in 2020. Robust consumption and healthy labor markets across regions limits global recession risk, Barclays said, while predicting rate cuts in the US and Europe. 

The AFPs finished June with USD 17.2 billion invested in cross-border funds and ETFs, almost all of which was in equity-oriented products.

North American equity a top attraction

North American equity pulled in USD 295 million during June, raising the category’s share to 26.6% of Colombian AFP assets in cross-border funds and ETFs. 

The AFPs had USD 4.5 billion in North American equity at the end of June. The asset class remains a bright spot amid global jitters over trade and economic growth.

iShares Core S&P 500 led inflows for the category, with USD 163 million entering the fund. North America equity funds rose, on average, 6.7% in June.

Emerging-markets equity continues strong

The AFPs put USD 171 million into emerging-markets equity funds, their top allocation, bringing total AUM to USD 5.1 billion. 

Those fresh investments came despite more signals of a slowdown in global economies, and in emerging markets in particular.

Credit Suisse expressed growing concern throughout June about prospects for emerging markets economic growth. 

“Macroeconomic data releases in emerging markets are missing consensus expectations by the largest margin since July 2013,” Credit Suisse said in a June 10 note to clients.

Emerging-markets equity accounted for 29.6% of the AFPs’ cross-border investments in the month.

Vanguard FTSE Emerging Markets ETF led inflows for that category, with USD 80 million coming into the fund. Emerging-markets-equity funds returned, on average, 5.7% in June.

Among smaller allocations, European equity funds attracted USD 160 million in the month, bringing AUM to USD 1.8 billion. The AFPs also added USD 103 million to Japanese equity, giving the category USD 1.7 billion in total assets.

Popularity of UCITs continues

Several equity-ETF UCITS saw inflows in June as the AFPs continue to seek tax savings by investing in funds domiciled in Europe rather than in the US. 

Funds with inflows during the month included: iShares Core S&P 500 UCITS, iShares Core MSCI EM IMI UCITS and iShares STOXX Europe 600 UCITS (DE).

Market leaders

Among top brands, iShares gained USD 487 million in June, giving it USD 8.1 billion under management and expanding its already commanding market share with the AFPs by a point to 47%.

Number two Vanguard ended the month with USD 2.7 billion in AUM, USD 411 million more than in May, and a 15% market share.

State Street held onto third place after shedding USD 10 million, for USD 706 million in AUM and a 4% market share.