Mutual Funds

Liquid Securities

Together with the CNBV and Price Vendors, AMIB analyzed the possibility of issuing a list of liquid equity securities, including high- and medium-marketability stocks included in the IPC, and if necessary, re-examine the assets currently on the list of liquid bank securities, in order to determine whether the list is complete.  We also asked them to include securities quoted in the SIC, and the CNBV pointed out that this matter is handled in the market of origin, as is the source of information that Price Vendors must use.

Regarding the list of stocks, the authorities agreed to include high- and medium-marketability stocks included in the IPC index sample, and the following topics are being analyzed by price vendors:
Equities:

  • Securities listed in the International Quotations System (SIC)
  • Foreign stocks listed in the National Securities Registry (Security Type 1E: Citibank, BBVA, Banamex, and Tenaris)
  • NAFTRACs
  • ETFs

Fixed-income instruments:

    • Securities included on the list of liquid bank securities where there is a risk of call or repurchase by the issuer

     

    Material Events

    The Unified Mutual Funds Bulletin stipulates that when a fund exceeds or fails to meet its investment limits, it must notify the Commission through the stock exchange's electronic information reception and distribution system on or before the business day following that on which the excess or shortfall occurred.  Accordingly, the BMV established a procedure for assigning a username and password for access to this system (EMISNET).

    AMIB met with representatives of the Issuers Department of the BMV to review how the report on investment limit violations by mutual funds had been managed, and agreed on the creation of a special section for mutual funds, because they are not fixed-income or equity security issuers, and the notice does not necessarily qualify as a "material event", which could have implications with clients.  A document specifying that request in writing was sent to the BMV.

    As a result of this discussion, another label was introduced that applied exclusively to mutual funds, which includes fund information in PDF formats. The BMV's Issuers Department sent out an announcement to the effect that starting on November 30, mutual funds can begin using the new Mutual Fund Information section to report violations of investment limits.

    In addition, it is also still possible for funds to submit that information through the Material Events section, if such is the case, and each fund manager will decide which module it will use to send the information, since the violation of investment limits may require a change in the prospectus (after 90 days) or the publication of temporary strategies.  Particular emphasis was placed on the fact that both mutual fund distributors and mutual fund managers are obliged to disclose material events.

     

    Meeting with AMAFORE representatives

    A meeting was held with members of the Investment Committee of the Mexican Association of Retirement Fund Managers (AMAFORE), in which they announced that they intended to expand their investment regimes to include other types of credit risk, for example Credit Derivatives.

    At AMIB's suggestion, they said they were willing to open investment to domestic and foreign mutual funds (from emerging countries) in which the commission would not be paid by the retirement fund manager but by the fund itself, with filters; taking advantage of market specialization through specific series, keeping commissions competitive and similar to those paid with TRACs.

    The Association offered to jointly undertake procedures for the authorization of investment in credit derivatives with Banco de Mexico. This process is currently in progress for mutual funds and brokerage firms.  The parties all agreed on the importance of encouraging and expansion of investment regimes to allow retirement funds to invest in the full range of investment-grade debt securities and directly in equities.

     

    Star Ranking 2007 from Standard & Poor's

    S&P representatives presented the methodology used to prepare the Star Ranking 2007 that it publishes each year. They noted that the methodology was the same as used in the previous year, containing ten categories on the basis of which stars would be assigned to fund series.
    They also said there would be no adjustments made for commissions, and all the fund series would be taken into account, just as they are in other countries.

    They reiterated that Star Ranking has nothing to do with credit risk rating, which is a different product offered by S&P.

    S&P supplied AMIB with the methodology used in this year's study, along with the preliminary classification it will use in each of the groups, for its review and analysis.  Some fund managers contributed remarks that were forwarded to the rating agency for its consideration. The results were published in Expansión magazine in its November 26-December 9, 2007 issue.

     

    FundPro Ranking

    Because of the rapid development of the Mexican mutual funds industry, and particularly the avid appetite investors are showing for materials and tools that will help them in the process of choosing the best mutual fund alternatives, Latin Asset Management launched a product called "FundPro Ranking". Accordingly, AMIB forwarded comments from some members of the Fund Managers' Committee to the company.

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