Press Release

The Fondo de Ahorro de Panama Announces Audited Consolidated Annual Financial Results for 2019 and Key Management Initiatives.

Panama | April 20, 2020

The Fondo de Ahorro de Panama, Panama’s Sovereign Wealth Fund, (hereinafter, “FAP” or “Fund”) announces its audited consolidated annual financial results for 2019 and key management initiatives.*

Financial Highlights

For the year end 2019, the net assets of the Fund reached a total of B/. 1,393.1 million, 9.27% more compared to the previous year, mainly due to high performing financial, complemented by the reinvestment of returns, now allowed under Law 51 of 2018.

In 2019, the Fund generated interest and dividends of around B /. 30.5 million, representing an increase of 12.5% compared to 2018. Net gains from our financial instruments (fixed income and equities) was B /. 91.4 million (vs. 2018: B /. -27.4 million). In its second year of implementation, our securities lending program generated B /. 58.1 thousand, 82% more than the previous period. The management and administration costs of the Fund closed for the 2019 period at B /. 3.8 million (2018: B /. 3.6 million). In summary, the Fund had a net gain in 2019 of B /. 118.2 million.

The Fund’s results for the year are mainly associated with our strategic asset allocation and the performance of our Benchmarks, both of which define the Fund’s Strategic Portfolio, which has a long-term investment profile. 

During 2019, the Fund’s Strategic Portfolio benefited from the strong equity and fixed income Benchmark performance, in great part as a result of the decreased trade dispute tensions between the US and China and an expansive monetary policy by the U.S.’s Federal Reserve(“FED”). The equity portfolio (16% of the Strategic Portfolio) closed 2019 with a return of 26.37% (-0.2% vs. Benchmark). In terms of fixed income (61% of the Strategic Portfolio), the return for 2019 was 8.77% (+ 0.55% vs. Benchmark), with 100% of fixed income assets invested in investment grade securities. The rest of the Strategic Portfolio (23% of the total), which is invested in liquid and short-duration assets, closed 2019 with a gross return of 2.59%.

Key Management Initiatives

Below are our key management initiatives:

  • Directors Moises Cohen and Julio Javier Justiniani took office at the behest of the Ministry of Economy and Finance as members of the Board of Directors;

  • The Board of Directors approved to extend the capacity building relationship with the World Bank Treasury;

  • The Board of Directors approved the incorporation of an Exchange Trade Fund to manage more efficiently the emerging markets portion of the equity portfolio;

  • The Board approved the use of the Barclays Global Aggregate Index Benchmark for global fixed income investments, which as of April 2019, will include Chinese fixed income assets;

  • The Board approved KPMG as external auditors for the 2019 and 2020 periods;

  • The Fund launches the asset management search for a private equity portfolio;

  • The Board of Directors approved the establishment of a return expectation and a reference portfolio to more transparently manage its investments decisions; and,

  • In 2019, the Fund was reaffirmed as one of the most transparent sovereign wealth funds globally, according to the Sovereign Wealth Fund Institute.

 

About the Fondo de Ahorro de Panama

The Fund was created by Law 38 of June 5, 2012, whose main objectives are:

  1. Establish a long-term savings mechanism for the Panamanian State; and

  2. Establish a stabilization mechanism in case of a state of emergency (declared by the Cabinet’s Council) and economic slowdowns.

For additional information visit www.fondoahorropanama.com

* The financial figures presented are expressed in Balboas, the currency unit of the Republic of Panama (B /.), Which is at par and is freely exchangeable with the United States dollar (USD or US Dollar), considered the functional currency of Fondo de Ahorro de Panamá.

###