Billionaire Carlos Slim's Grupo Financiero Inbursa SAB is paying the lowest return among Mexican pension funds by keeping more than 50% of assets in local government bills, missing out on the biggest rally in longer-term debt since 2006.
The five funds of Afore Inbursa, as the pension division is known, returned an average 7.06% annually in the 36 months ended in November, trailing the more than 9% advance of top performing funds managed by ING Groep NV and Citigroup Inc., according to data from pension regulator Consar.
Slim's group has 57% of its $9.6 billion in pension assets in government bills that mature in less than a year because it expects an expanding economy will prompt the central bank to raise interest rates, hurting longer bonds, Inbursa Chief Executive Officer Marco Antonio Slim Domit said. Mexican T-bills yield 4.12% to 4.77% while the 10% peso bond due in 2024 returned 16.3% this year, including reinvested interest, according to data compiled by Bloomberg.
“There are moments to be conservative and moments to be aggressive,” Mr. Slim Domit, who at 42 is the billionaire's second-eldest son, said in a Dec. 17 telephone interview from Mexico City. “With interest rates, yes, we think that this is a moment to be conservative.”
Banco de Mexico, led by Governor Agustin Carstens, will hold the benchmark interest rate at 4.5%, the lowest since the bank started setting a target rate in 2005, through the end of 2011, according to a Dec. 20 survey of 18 economists by Citigroup's Banamex unit.