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Pension Fund Investment Limits Versión Español
 
  A. Investment Limits per instrument   B. Investment Limits in Specific instruments and in Groups of Instruments or Sectors   C. Investment Limits per Issuer
D. Investment Limits in the case of Issuers which are Related to the Administrator   E. Factors considered in the Limits per Issuer in Shares and in Investment Fund Shares

A. Investment Limits per instrument (as a function of the Value of the Fund)

INSTRUMENT MAXIMUM LIMITS PER TYPE OF FUND
FUND A FUND B FUND C FUND D FUND E
1. Securities issued by the Central Bank of Chile, securities issued by the General Treasury of the Republic, letters of credit issued by Regional and Metropolitan Housing and Urbanization Services, recognition bonds issued by the Institute of Social Security Normalization and other Social Security Institutions, other securities issued or guaranteed by the State of Chile.
40%

40% 50% 70% 80%
2. Time deposits, bonds and other securities representing deposits issued by financial institutions. 40% 40% 50% 70% 80%
3. Securities guaranteed by financial institutions. 40% 40% 50% 70% 80%
4. Letters of credit issued by financial institutions. 40% 40% 50% 60% 70%
5. Bonds of public and private companies. 30% 30% 40% 50% 60%
6. Bonds of public and private companies which are convertible for shares. 30% 30% 10% 5% ---
7. Open corporation shares. 60% 50% 30% 15% ---
8. Shares of open real estate corporations. 60% 50% 30% 15% ---
9. Investment fund shares as referred to in law Nº 18,815, plus the value of future commitments under agreements to subscribe and purchase domestic investment fund shares and mutual fund shares governed by D.L. Nº 1,328 (1976).
40% 30% 20% 10% ---
10. Commercial Paper issued by public and private companies, corresponding to promissory notes or other credit or investment securities, with a non-renewable term of no more than one year counting from their inscription in the Securities Register.
10% 10% 10% 20% 30%
11. Credit securities or negotiable instruments issued or guaranteed by foreign States, central banks or foreign or international banking institutions;
Stocks and bonds issued by foreign companies;
shares issued by foreign mutual funds and investment funds;
Foreign securities representing share indexes;
Short-term deposits;
Operations with the sole aim of hedging the financial risks mentioned in this paragraph, referring to fluctuation risk in the case of different foreign currencies or interest rate risk in a single foreign currency;
Investment abroad involving investment in shares issued by investment and mutual funds as referred to in number 9 above, where these have more than 50% of their assets invested abroad.		 The sum of the investment of the types of Funds belonging to a single Administrator in foreign securities, plus the amount of investment made abroad through domestic mutual and investment funds, has as a maximum limit 20% of the value of the sum of the types of Pension Funds managed by a single Administrator.
12. Other public offering instruments whose issuers are supervised by the Superintendency of Securities and Insurance or the Superintendency of Banks and Financial Institutions, as appropriate, as authorized by the Central Bank of Chile For each type of instrument mentioned in this number, the maximum investment limits for funds A,B,C,D and E may be no less than one percent and no more than five percent of the value of the respective Fund. The Central Bank of Chile is responsible for deciding these.
13. The sum of investments in foreign currency without exchange hedging 40%
-provisionally 37% until 31st October 2003 		25%
-provisionally 22% until 31st October 2003 		20%
-provisionally 18% until 31st October 2003		 15%
-provisionally 13% until 31st October 2003		 10%
-provisionally 9% until 31st October 2003
14. Operations or contracts aimed at the loan or mutuum of financial instruments of local issuers, calculated as a function of the financial instruments loaned
15% 10% 5% 5% 5%
15. Time deposits, bonds and other securities representing deposits issued by financial institutions, and securities guaranteed by financial institutions.
40% 40% 50% 70% 80%
16. Bonds of public and private companies and bonds of public and private companies which are convertible for shares 30% 30% 40% 50% ---
17. Shares of open corporations and shares of open real estate corporations 60% 50% 30% 15% ---
18. Local mutual fund shares governed by Decree Law 1,328 (1976), referred to in number 9 above. 5% 5% 5% 5% ---
19. Contributions from agreements of subscribe and purchase investment fund shares, as referred to in number 9 above 2% 2% 2% 2% ---

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B. Investment Limits in Specific Instruments and in Groups of Instruments or Sectors (as a function of the Value of the Fund)

B.1. Maximum Investment Limits for Specific Instruments and Groups of Instruments or Sectors (as a function of the value of the Fund)
INSTRUMENT MAXIMUM LIMITS PER TYPE OF FUND
FUND A FUND B FUND C FUND D FUND E
I. CAPITAL
1. OCS with lowest liquidity factor. 10% 8% 5% 2% ---
2. OCS + IFS + MFS which do not require the approval of the Risk Rating Commission (RRC). 3% 3% 1% 1% ---
3. EXT + other public offering securities supervised by the SSI or SBFI, which do not require the approval of the RRC. 1% 1% 1% 1% ---
4. OCS + ORECS + IFS + MFS as referred to in number 9 of letter A above, plus the value of future commitments under agreements to subscribe and purchase investment fund shares + instruments representing capital as indicated in numbers 11 and 12 of letter A above. 80% 60% 40% 20% ---
II. DEBT
1. FIN + LCFI + PPCB + BCS + COP + [ EXT + OISI ] if they are debt instruments classified in risk category BBB and level N-3. 10% 10% 10% 5% 5%
III. DEBT AND CAPITAL
1. BCS + capital instruments and debt instruments classified in risk category BBB and level N-3. --- --- 45% 22% ---
2. PPCB + BCS + OCS + COP + OISI where the issuer has been operating under three years old. 10% 10% 10% 8% 5%
3. Restricted instruments: OISI+[OCS] with a lower liquidity factor + [ OCS + IFS + MFS + FMFS + FIFS + OISI ] which do not require the approval of the RRC + [ PPCB + BCS + OCS + COP + OISI ] where the issuer has been operating under three years old + [ FIN + LCFI + PPCB + BCS + COP + EXT + OISI ] classified in risk category BBB and level N-3. The Central Bank of Chile may exclude from this limit each type of instrument included in number 12 of letter A above (OISI). 20% 20% 20% 15% ---

 
B.2. Minimum Investment Limits for Specific Instruments and in Groups of Instruments or Sectors (as a function of the value of the Fund)
INSTRUMENT MINIMUM LIMITS PER TYPE OF FUND
FUND A FUND B FUND C FUND D FUND E
1. OCS + ORECS + IFS + MFS as referred to in number 9 or letter A above, plus the value of future commitments under agreements to subscribe and purchase investment fund shares + instruments representing capital as given in numbers 11 and 12 of letter A above.. 40% 25% 15% 5% ---
 


Capital Instruments:
 • OCS: Open Corporation Shares.
• ORECS: Open Real Estate Corporation Shares.
• IFS: Local Investment Fund Shares.
• MFS: Local Mutual Fund Shares.
• FIFS: Foreign Investment Fund Shares.
• FMFS: Foreign Mutual Fund Shares.

Debt Instruments:
 • LCFI: Letters of Credit issued by financial institutions.
• COP: Commercial Paper.
• PPCB: Bonds of public and private companies.
• FIN: Time deposits and other securities representing deposits in financial institutions and securities guaranteed by financial institutions.
Others:
 • BCS: Bonds convertible for shares.
• OISI: Other types of instruments whose issuers are supervised by the S.V.S (Superintendency of Securities and Insurance) and S.B.I.F. (Superintendency of Banks and Financial Institutions), authorized by the Central Bank of Chile.
• EXT: Credit securities, stocks or commercial paper issued or guaranteed by foreign Governments, Central Banks or foreign or international Banks; share units; stocks and bonds issued by foreign companies, approved by the Risk Classification Commission.

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  C. Investment Limits per Issuer
 
INSTRUMENTS INDIVIDUAL FUNDS SUM OF FUNDS
A + B + C + D + E
SECTORS % FUND % COMPANY % SERIES % COMPANY % SERIES
I. FINANCIAL SECTOR
Deposits in current accounts and time deposits, and Debt Securities issued or guaranteed by banks, financial institutions and their subsidiaries. 10% VF x fij MU1 x INW --- MU1 x INW ---
Shares (where appropriate) + deposits in current accounts and time deposits + Debt Securities issued or guaranteed by banks, financial institutions and their subsidiaries. 7% VF --- --- --- ---
II. FOREIGN SECTOR
Shares 0,5 % VF        
Debt securities 5% x VF x fij        
Mutual and Investment Funds 1 % VF        
Freely available stocks traded in local markets (which do not require the approval of the CCR) 0,15%xVF 7% x TSSF   7% x TSSF  
Investment Fund shares mentioned in number 11 of letter A above, from one single issuer, which do not require the approval of the RRC 0,15%xVF 35% x IFS   35% x IFS  
Mutual Fund shares mentioned in number 11 of letter A above, from one single issuer, which do not require the approval of the RRC 0,15%xVF 35% x MFS in circulation   35% x MFS in circulation  
III. COMPANIES SECTOR
A) Bonds and Commercial Paper
Debt securities of leasing companies: bonds and commercial paper 7% VF x fij MU2 x INW   MU2 x INW 35% series
Individual companies: Bonds and commercial paper issued or guaranteed by individual companies 7% VF x fij MU3 x issuer’s assets   MU3 x issuer’s assets 35% series
Head Offices and Subsidiaries: Bonds and commercial paper , issued or guaranteed 7% VF x fij MU3 x net consolidated issuer assets   MU3 x net consolidated issuer assets  
Securitization Companies: Bonds and commercial paper , issued or guaranteed 7% VF x fij   35% series   35% series
Companies under 3 years old:Bonds and commercial paper , issued or guaranteed 3% VF x fij   35% series   35% series
B) Business Groups
Shares, bonds and commercial paper, issued or guaranteed 15% x VF        
C) Shares
Shares of Open Corporations 5% x VF x CF x LF 7% x TSS 20% new issue 7% x TSS 20% new issue
Shares of Real Estate Corporations 5% x VF x CF 20% x TSS 20% new issue 20% x TSS 20% new issue
Shares that do not require the approval of the RRC 0,15% x VF 7% x TSS 20% new issue 7% x TSS 20% new issue
Shares of Banking or Financial Companies 2,5% x VF x CF x LF 2,5% x TSS 20% new issue 2,5% x TSS 20% new issue
D) Investment and Mutual Fund Shares
Investment Fund Shares and subscription agreements 5% x VF x DF 35% x IFS 35% new issue 35% x IFS 35% new issue
Mutual Fund Shares 1% x VF 35% x MFS in circulation   35% x MFS in circulation  
Investment Fund Shares from number 9 of letter A above, which do not require RRC approval 0,15% x VF 35% x IFS issued 35% new issue 35% x IFS issued 35% new issue
Mutual Fund Shares from number 9 of letter A above, which do not require RRC approval 0,15% x VF 35% x MFS in circulation   35% x MFS in circulation  
Payment commitments under agreements to subscribe and purchase 0,5% x VF        
E) Stocks and Bonds and Commercial Paper
Individual companies (Funds A, B, C and D) 7% VF        
 
• TSS: Total subscribed shares of the company, multiplied by their price.
• TSSF: Total subscribed shares of the foreign company, multiplied by their price.
• IFS: Subscribed shares of the respective Investment Fund.
• MFS: Local mutual fund shares in circulation
• fij: Average weighted risk factor, the value of which depends on the risk rating of the instruments and the amount of investment in them.
• CF: Concentration factor, which will vary between 0.3 and 1.
• DF: Diversification factor, which will vary between 0 and 1.
• LF: Liquidity factor, which will vary between 0.2 and 1. Fixed by the Central Bank of Chile.
• MU1: Single multiple used by all financial institutions whose range varies between 0.5 and 1.5. Currently fixed at 1.0
• MU2: Single multiple used for companies whose corporate purpose involves leasing operations, which varies between 0.4 and 1. Currently fixed at 0.7.
• MU3: Single multiple for Bonds and Commercial Paper, which varies between 0.08 and 0.12. Currently fixed at 0.12.
• INW: Issuer’s net worth.
• VF: Value of the Pension Fund, where this is understood to be the closing value of the instrument portfolio plus the balance in current accounts in local and foreign investment Banks.
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  D. Investment Limits in Issuers which are related to the Administrator
 
INSTRUMENTS INDIVIDUAL FUNDS SUM OF FUNDS
NORMAL LIMIT RELATED LIMIT A + B + C + D + E
Open Corporation Shares 5% x VF x CF x LF 5% x VF x CF x LF and high liquidity 5% x VF x CF x LF and high liquidity
7% x TSS 2% x TSS 2% x TSS
Open Real Estate Company Shares 5% x VF x CF 5% x VF x CF and high liquidity 5% x VF x CF and high liquidity
20% x TSS 5% x TSS 5% x TSS
Banking or Financial Shares 2,5% x VF x CF x LF 2,5% x VF x CF x LF and high liquidity 2,5% x VF x CF x LF and high liquidity
2,5% x TSS 0,5% x TSS 0,5% x TSS
Freely Available Shares 0,15% x VF 0% 0%
7% x TSS 0% 0%
Debt Securities Given Above Only category AAA or AA or with risk level N-1 and governed by the limits listed above 5% of the issue and 20% of the daily placement
3% x value of issuer assets
3% x value of the net consolidated accounting assets of the issuer
Investment Fund Shares:AFP related to Investment Fund Manager 5% x VF x DF    
35% x IFS - 5% x IFS
Mutual Fund Shares:AFP related to Mutual Fund Manager 1% x VF -  
35% x MFS - 5% x MFS
Investment Fund Shares when these possess securities of an issuer which is a person related to the Administrator   - 10% of the shares
Mutual Fund Shares when these possess securities of an issuer which is a person related to the Administrator   - 10% of the shares
Limit for investment in instruments issued or guaranteed by each issuer related to the AFP   1% x VF -
Limit for direct or indirect investment in instruments issued or guaranteed by all the companies related to the AFP   5% x VF -
 
• TSS: Number of subscribed stocks multiplied by their price
• VF: Value of the Pension Fund
• LF: Liquidity Factor
• CF: Concentration Factor
• DF: Diversification Factor
• IFS: Subscribed shares of the respective Investment Fund
• MFS: Local mutual fund shares in circulation
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    E. Factors considered in the Limits per Issuer for investment in Shares and Investment Fund Shares
• Concentration Factor (CF)
This is calculated on the basis of the maximum ownership concentration allowed in the company’s by-laws and on its being subject to Section XII of Decree Law Nº 3,500.

 
 
MAJORITY SHARE HOLDING CONCENTRATION FACTOR
Subject to Section XII <=32% 1
>32% to <50% 0,8
>=50% to <=65% 0,6
Not subject to Section XII <=32% 0,6
>32% to <50% 0,5
>=50% to <=65% 0,4
>65% 0,3
 
• Liquidity Factor (LF)
This is calculated on the basis of the presence of the shares in the stock exchanges and the amount of trading in which they are involved (the Liquidity Index). The scale fixed by the Central Bank is as follows:
 
LIQUIDITY INDEX LIQUIDITY FACTOR
IL<=20% 0,3
20%< IL <=50% 0,5
50%< IL <=70% 0,7
70%<IL 1
 
• Diversification Factor (DF)
This is calculated according to the proportion of the total assets of an Investment Fund which are invested directly or indirectly in instruments issued or guaranteed by a single issuer; where:
 
DIRECT AND INDIRECT INVESTMENT IN A SINGLE ISSUER DIVERSIFICATION FACTOR
Inv.<=20% of the total assets of the Fund
1,0
20%< Inv.<=25% of the total assets of the Fund 0,8
25%< Inv. <=1/3 of the total assets of the Fund 0,6
1/3< Inv.<=40% of the total assets of the Fund 0,2
Inv.>40% of the total assets of the Fund 0
   

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