Assessing Mexicos Financial Market

Central Bank Established in 1925, Mexicos central bank, Banco de Mxico, has $128 billion in ofcial reserve assets.

Sovereign Wealth Fund The Oil Revenues Stabilization Fund of Mexico is a $6 billion commodity sovereign wealth fund established in 2000. Inows are derived from

Mexico: Reserve Assets

US$ Billions

a special levy on oil revenues.

140 120 100 80 60 40 20 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Objective: To protect government

nances and the domestic economy from sudden changes in oil prices and other factors. Liquidity is the focus.
Allocation: Invested in short-term

money market instruments at the Banco de Mexico using the same guidelines as apply to other external government accounts. Regulatory Landscape

Mutual Funds The Mexican mutual fund industry has approximately $100 billion in assets under management and is expected to nearly double by 2015. Despite the advent of a modern mutual fund law in 2000, mutual funds have continued to get short shrift due to staff cuts at the securities commission and the lack of a dedicated advocacy group for the advancement of mutual funds. While Mexican mutual funds saw strong inows from corporate and institutional investors in 2010, the total number of mutual fund accounts in the country has eroded.

Foreign investors are subject to investment limits in companies dedicated to mining, certain areas of telecommunications, and nancial and maritime activities.

Allocation: Mexican mutual funds have become more conservative since

Foreign investors are required to monitor the ownership thresholds and effect the necessary reporting to the principal regulator, the Comision Nacional Bancaria y de Valores.

2005, allocating a vast majority of assets (80 percent) to money market and bond funds, and most of that in short-term instruments. Equity holdings make up only 7 percent of assets. Although mutual funds are permitted by law to invest up to 100 percent in international securities, the countrys tax policy encourages local investment.

Mexico: Projected Mutual Fund Assets Under Management

US$ Billions 250 200 150 100 50 0 2010 2011E 2012E 2013E 2014E 2015E

MARKET PROFILE: MEXICO