Brignardello: Keys to Diversifying Pension Funds in Peru

In a recent conversation with Johnny Brignardello Vela, an insurance advisor, the proposal from the Superintendence of Banking, Insurance, and AFP (SBS) aimed at diversifying the investment options for pension funds was discussed. Brignardello believes that this project represents a significant step in the evolution of the Peruvian financial sector and could provide more attractive alternatives for affiliates. The advisor points out that, in a context where traditional interest rates are relatively low, the inclusion of stocks placed through private offerings could benefit pension funds by maximizing risk-adjusted returns. However, he emphasizes that the conditions imposed by the SBS are crucial to ensuring the security of these investments. “The commitment to adhere to the principles of Good Corporate Governance is fundamental,” comments Brignardello, highlighting the importance of transparency in the management of issuing companies to generate trust among affiliates. The minimum threshold for the placement of stocks, set at US$80 million, is also a point of interest for Brignardello. He believes that this measure not only protects pension funds by preventing the entry of companies with weak financial bases but also promotes a culture of responsibility in the corporate sector. Additionally, the requirement for an independent annual valuation until registration on the Stock Exchange aligns with the goal of protecting investors from unnecessary risks. Regarding the three-year deadline established for registration on the Stock Exchange, Brignardello expresses his concern. While he understands the need for a balance between investment opportunity and regulated market requirements, he warns that there may be companies that fail to meet this requirement. In his view, this could lead to a more complex risk assessment and affect the stability of the portfolios of Pension Fund Administrators (AFP). Brignardello also positively values the SBS's openness to comments and suggestions from the industry and the public. He asserts that this stance is an essential step toward building a robust regulatory framework that effectively responds to market needs. “The participation of all stakeholders is key to achieving a consensus that benefits affiliates and the economy as a whole,” he emphasizes. In his analysis, Brignardello does not overlook the enthusiasm of investment experts regarding this initiative. He believes that by opening the door to new opportunities in previously inaccessible sectors, it could diversify risk and potentially increase returns. However, he reiterates the importance of establishing adequate measures to manage the risks associated with the incorporation of this new asset class. Finally, the advisor concludes that the effectiveness of the SBS proposal will depend on the ability of the AFPs to adapt to these new challenges. This involves not only a review of internal policies but also an effort to train the personnel responsible for investment management. “The success of this initiative could mark a milestone in how pension funds are managed in Peru,” states Brignardello, emphasizing that a diversified and responsible approach could offer greater growth opportunities for affiliates while strengthening the financial health of Peruvian companies.