In what types of financial instruments are the funds invested?

The funds are invested according to different guidelines compatible with each fund specific objectives.

The PRF is invested in fixed income instruments issued by sovereign issuers as well as sovereign related entities (multilateral agencies, municipalities, state owned companies, among others) and as a whole they account for 65% of the fund. The PRF is also invested in fixed income issued by private corporations (20% of the fund) and equity (15% of the fund). Fixed income instruments must have an investment grade rating, and the portfolio can only be invested in securities that are part of the corresponding benchmarks. The PRF’s strategic asset allocation would be gradually adjusted according to its new investment policy approved in November of 2017, based on the Financial Committee’s recommendations. The new strategic asset allocation is the following: 23% in fixed income instrument issued by sovereign issuers and sovereign related entities, 5% in Inflation linked bonds, 13% in corporate bonds, 40% equity, 6% in US Agency MBS, 8% in High Yield Bonds, and finally 5% in Real Estate.

According to the current investment policy, the majority of the ESSF is invested in sovereign fixed income (92.5%), of which 77.5% is invested in sovereign instruments issued by the U.S., Germany, Japan and Switzerland, and 15% in banking deposits in institutions with a credit rating of at least A-. The remaining 7.5% is invested in equities.


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