The Asociación Chilena de Administradoras de Fondos de Inversión A.G. -ACAFI for its initials in Spanish- is a trade association that gathers almost the entire fund management industry in Chile. It was created in 2003 and become a legal entity in 2005.
Currently, ACAFI represents all of the investment funds management companies operating in the country. Now, the association has 27 members, among which there are subsidiaries of the banking or financial institutions.
As a professional association related to the investment fund industry, ACAFI has been the Government and the Legislative interlocutor regarding initiatives as relevant as Capital Market II (MKII) and Capital Market III (MKIII)
The investment funds are equities composed by contributions made by individuals and by legal entities —called shareholders—to be invested in securities and goods under a regulatory framework.
Its equity is composed by contributions expressed in non-redeemable quotas until the execution of the fund, these quotas constitute private or public securities with the due registration in the Superintendencia de Valores y Seguros (Superintendence of Securities and Insurance), SVS in Spanish.
Public investment funds must be managed by a special management firm with a special line of business, regulated by the SVS.
These financial instruments are divided into three main categories: Movable, Real Estate and Private Equity.
Each fund has a series of contributors which can come from financial institutions, pension funds or individuals.
Its operation is regulated by Law 18,815 of 1989 on Investment Funds, by the Supreme Decree Nr. 864 of the Ministerio de Hacienda (Ministry of Finance), by the respective regulations of each fund and the administrative regulation issued by the Superintendency.
Diversification and return: the investment in an investment fund allows a private or institutional investor to diversify his equity when investing in alternative assets which have, historically and worldwide, given excellent returns. Expertise: Investing in an investment fund allows to leave the management of resources in experienced administrators of specific assets (i.e. Movable, Real Estate and Private Equity funds).
Among the most relevant differences regarding financial tools, we must highlight the redeemability of the quotas. Regarding investment funds, the contributions are expressed through non-redeemable quotas until the execution of the fund. In the case of mutual funds, quotas can be redeemed in a short time period. Similarly, the first ones can invest in general securities like stocks or closely held corporations. Instead, mutual funds can only invest in public offering securities.
Public funds are those which can offer their securities publicly, thus, they must comply with a series of regulations related to the composition of its portfolio, with limits to the operations with related companies, and the must provide information to the public and to the corporate government, among others. A public fund must be managed by a fund administrator company (AFI or AGF), under the regulations of the SVS. Instead, private equities are those that cannot offer of their securities to the public and therefore, are not supervised by the SVS. These funds are mainly ruled by the terms of their inner regulations. The management of those funds must comply with the norms that regulate closely held companies, so they shall explicitly indicate they are agencies not regulated or supervised.
To December 2010, administrator companies member of ACAFI managed resources for US$9.970 billion, of which US$4.962 billion correspond to share funds.
Real estate investment funds managed resources for US$1.643 billion, of which approximately US$260 million correspond to private capital investment funds. This represents an important growth, if we take into consideration that, during the last six years, resources managed by the industry have more than tripled.
This entity acts through giving loans, with quasi equity features, to any fund investing in projects linked to Venture Capital.
The CORFO credit facilities -F1, F2 and F3- are given under a strict control process and a deep assessment of the pertinent fund.
The Venture Capital funds that receive these facilities must invest in small and medium companies established as corporations, within the country. The company’s equity should not exceed UF 100,000 at the time the contributions are made. Once the reform to the financial market (MKII) was approved, CORFO received an authorization to invest directly on shares in Venture Funds, up to 40% of its total amount of quotas.