Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Mexican Pension Funds Show Interest In Gold

Published 02/03/2014, 12:31 PM
Updated 02/03/2014, 01:00 PM
Mexican Pension Funds Show Interest In Gold

Mexican Pension Funds Show Interest In Gold

By Nat Rudarakanchana - Mexico’s pension funds have showed fresh interest in gold, after the lifting of years of strict investment regulations, according to the World Gold Council.

The council has talked to about half of the country’s twenty or so influential pension fund managers, who together manage $160 billion in assets, said council investment research director Juan Carlos Artigas on Monday.

Legislation from 2012 allowed Mexican pension funds to invest in gold and commodities in 2013, and invest more freely in foreign assets. Japan’s pension funds, who together hold the world’s second largest pool of retirement assets, have also gravitated towards gold.

“I spoke to many of the pension funds in Mexico last year,” Artigas told reporters in New York on Monday. “Many of them are interested…They need to get a certification for investing in commodities. But once they do, it’ll be likely that they’ll start investing.”

“Compared to the pension fund space in the U.S., it’s probably small, but it’s still $160 billion or so in assets. So it’s still substantial,” he continued. Mexican pension funds account for 22 percent of Mexican savings, ad could double in assets by 2018, according to the Wall Street Journal.

Mexico’s pension funds still face caps on how much they can invest in commodities and foreign assets, as a slice of their assets. They won’t be able to invest more than 10 percent of their assets in commodities, depending on the fund’s structure.

The world’s largest gold-backed fund, SPRD’s GLD, is cross-listed for trade in Mexico, so investments in the fund won’t count toward a foreign investment cap, said Artigas.

Pension fund interest in gold rarely impacts the yellow metal’s price, since it plays a relatively small role in a $236 billion global market. Bloomberg estimated in 2012 that only $9 billion in Mexican pension assets will be eligible for commodities investment overall. At the same time, influential U.S. hedge funds sold gold heavily in 2013, contributing to bearish sentiment.

Mexican pension fund purchases of gold may amount to dozens of metric tons at most, in a market which demands over 4000 tons annually. But there are already fifteen Japanese pension funds buying gold through exchange-traded funds, who may make a larger impact, according to William Rhind, who handles institutional investors for the council.

Gold performed better than most Mexican assets from 2003 to 2013, but underperformed Mexican equities, earlier World Gold Council research showed. Gold prices fell 28 percent in 2013, in their worst year since 1981. 

Latest comments

I hope the interest is in physical and not paper!!
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.