The Fondo de Ahorro de Panama Announces Audited Consolidated Annual Financial Results for 2018 and Key Management Initiatives.
Panama | April 3, 2019
The Fondo de Ahorro de Panama, Panama’s sovereign wealth fund, (hereinafter, “FAP” or “Fund”) announces its audited consolidated annual financial results for 2018 and key management initiatives.
For the year end 2018, the net assets of the Fund reached a total of B/. 1,274.9 million, 2.7% less compared to the previous year, mainly due to changes in the market value of our investments and to the distribution of B/. 31.5 million of 2017 financial results to the National Treasury, at the request of the Ministry of Economy and Finance (“MEF”).* Since its inception in 2012, the Fund has distributed close to B/. 131.5 million to the National Treasury. (Access our Annual Report 2018 in Spanish here).
In 2018, the Fund generated interest and dividends of around B /. 27.1 million. Net realized gains for the year from our financial instruments (fixed income and equities) was B /. 28.7 million. In terms of the valuation component of our investments at market prices (mark-to-market), the Fund presented an unrealized loss of B /. -56.1 million (vs. 2017: B /. 72.1 million). The management and administration costs of the Fund closed for the 2018 period at B /. 3.6 million (2017: B /. 3.9 million). Our securities lending program, in its first year of implementation, generated B /. 32 thousand. In summary, results for the Fund was a net loss of B /. 3.8 million.
The Fund’s results of the year are mainly associated with the performance of our benchmarks, and the strategic asset allocation employed on our Strategic Portfolio, which has a long-term investment profile. During 2018, the performance was unfavorable for the equities portfolio (13% of the total portfolio of the Fund) with a performance of -9.2% (+ 0.2% vs. benchmark) due to: a) concern in the financial markets that the U.S. Federal Reserve would raise rates faster than expected; b) the increase in geopolitical risk with the so-called “Brexit”; c) commercial tensions between the U.S. and China; and d) the performance of the Chinese economy and emerging market countries. In terms of fixed income (62% of the total portfolio of the FAP), the 2018 performance was 1.5% (-0.15% vs. benchmark), as investors took refuge in safer instruments such as sovereign bonds of developed countries. The rest of the Strategic Portfolio (25% of the total), which is assigned to liquid and short duration assets, as part of our capital preservation and risk reduction strategy, closes the year with a gross return of 2.1%.
The investment management strategy of the Fund is characterized by a prudent and long-term management policy, with 100% of the fixed-income assets invested in securities with high credit quality ("investment grade").
Key Management Initiatives
Below are our key management initiatives:
The Fund establishes its Investment Policies for the Alternative Investment Program in Private Equity;
At the request of the MEF, the Fund distributed B /. 31.5 million to the National Treasury, related to 2017 earnings;
The Board of Directors approved the Annual Investment Plan and Strategic Asset Allocation for 2018/2019;
The National Assembly of Panama approved Law No. 51 of 2018 to strengthen the Fund's capitalization framework (reinvestment and new contributions); and
In 2018, The FAP is reaffirmed as one of the most transparent sovereign wealth funds in the world, 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:
Establish a long-term savings mechanism for the Panamanian State; and
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.