Fitch: Positive Outlook for Pension Funds in 2015

The Fitch report '2015 Outlook: Pension Funds; Competitive Performance, Diversified Portfolios and Adaptable to the Environment' discusses Fitch's view for the Pension Funds (Siefores) for 2015. This is based on various factors that could contribute to an increase in contributions to the pension system, and also in some risks that could alter the country's outlook in both the short and medium term.

Fitch highlights the positive evolution of the resources of the Savings for Retirement System (SAR). As of Oct. 31, 2014, net assets managed by Afores totaled MXN2,309.2 billion, up 14.1% from the same month the previous year. Fitch expects that resources will continue to trend upward, driven by the returns generated and net flows.

Furthermore, the authority continued in a very dynamic role, implementing regulatory changes and expansion of the investment regime, aimed at strengthening the system.

The report also highlights a higher diversification of Siefores portfolios over the last few years. During 2014, managers increased the participation in international equity instruments, national private debt and structured instruments, and the granting of mandates. Siefores' good performance benefited from the favorable financial environment in 2014, which allowed the pension funds to adjust the composition of their portfolios accordingly.

At the end of October 2014, Basic Siefores (SBs) recorded competitive returns, despite recent periods of market volatility. At the same time, SBs realized a compound annual return over a five-year horizon of 8.6% (after commissions), which is positioned above the inflation rate and returns on other investment options. Fitch estimates the average compound annual return (RAC) of Siefores will show a positive performance and will continue being attractive in 2015.

Siefores showed positive performance during 2014. Fitch believes that the external environment will remain an important factor in financial markets performance over the year and, therefore, in the growth of returns. However, Fitch believes the outlook for 2015 is positive.

The special report "2015 Outlook: Pension Funds; Competitive Performance, Diversified Portfolios and Adaptable to the Environment", is available at www.fitchratings.com and www.fitchratings.mx.

Additional information available at: www.fitchratings.com or www.fitchratings.mx.

Applicable Criteria and Related Reports:

- Mejoran Rendimientos de las Siefores en 2014 (November 2014);

- 2014 Outlook: Pension Funds (Diversification as a Strategy in a Volatile Environment) (February 2014).

Applicable Criteria and Related Research: 2015 Outlook: Pension Funds (Competitive Performance, Diversified Portfolios and Adaptable to the Environment)

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=856449

Mejoran Rendimientos de las Siefores en 2014

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=813708

2014 Outlook: Pension Funds (Diversification as a Strategy in a Volatile Environment)

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=733255

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