AFP funds in Peru could yield double digits, according to Diego Marrero of Habitat

AFP funds in Peru could yield double digits, according to Diego Marrero of Habitat

The funds of members of the Private Pension System (SPP) ended 2023 in blue. Fund 1 offered a return of 16% per year, on average; followed by fund 2 with 9.9% and fund 3 with 5.18%, according to data from the Superintendence of Banking, Insurance and AFP (SBS). The investment manager of AFP Habitat, Diego Marrero, spoke with Gestión about the performance expected this year for the funds managed by the AFPs, and the impact of a potential seventh withdrawal.

How did pension funds do in 2023?

It was an excellent year for the market. The profitability in 2023 was higher than the devaluation recorded in 2022, when the funds obtained negative results. It was possible to recover all the losses that had been generated in accounting terms, that is what is important. And, at the Habitat level, we lead in returns in all three funds.

Which fund did better?

The most critical case was that of fund 3, which, in Habitat, returned a little more than 8%, although the market average was below. However, in fund 2 we exceeded 11% and fund 1 achieved 18%.

Will the funds’ performance be similar this year?

In 2024, we expect that the cycle of interest rate cuts will be very positive for the markets and, at the same time, that there will be economic growth. We do not believe there will be a recession, as some economists predict.

Will fund 1, more conservative, once again lead in profitability?

That’s not necessarily going to be repeated; I think it’s going to be the other way around. Fund 3 should earn a little more than fund 1 in 2024. But, in general, the markets should be positive, so, in reality, all funds should appreciate.

Why do you estimate a better performance for fund 3?

Because it takes more risk than fund 1. Fund 3 is more exposed to international market equities, also to currencies from other countries. That does not mean that fund 1 will do badly. Definitely, we are not going to see an increase in value in all assets equally, but it will depend on how the portfolios have been positioned.