Vanguard, one of the world’s biggest asset managers, plans to triple the size of its Miami team and expand elsewhere in the US to cater to Latin Americans looking to move more of their wealth offshore.
The firm’s Miami group is expected to grow to 15 people over the next five years from five currently, according to Juan Hernandez, Vanguard’s head of Latin America. The firm is also looking to expand its offshore services in the next 12 to 18 months in places including California and Houston.
“US offshore is a really important hub for the wealth of Latin America,” Hernandez said in an interview in Mexico City. “For a few years now, it has made perfect sense for us to provide service to our clients who are operating in Mexico, Brazil and Chile.”
Rich Latin Americans have traditionally held much of their wealth abroad, in part to escape political instability and economic turbulence at home. The US is typically their first preference, according to Hernandez.
Earlier this year, JPMorgan Chase & Co.’s private bank said it raked in $60 billion from Latin American clients over the past four years. And State Street Investment Management and BBVA Global Wealth Advisors have also recently looked to tap the segment.
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Vanguard manages about $11 trillion in assets globally, with $80 billion of that in Latin America. Mexico is the firm’s principal market in the region, with the country’s pension funds — which have ballooned in size in recent years amid reforms — among its main institutional clients there.
Net assets of investment vehicles managed by the country’s pension funds have tripled over the past decade to 7.5 trillion pesos ($400 billion) as of June, according to Consar, the regulator that oversees the funds. Consar President Julio César Cervantes predicts total workers’ savings in pension funds will climb to 12 trillion pesos in 2030.
One area where change is needed amid the growth of the pension funds, known as Afores, is their ability to invest abroad, Hernandez said. Foreign securities are currently capped at 20%.
“We believe that a major opportunity to address in the coming months or years is raising the limit so that the Afores can truly diversify,” he said.
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