The Fondo de Ahorro de Panama Announces Audited Consolidated Annual Financial Results for 2016 and Key Management Initiatives.
Panama | March 31, 2017
The Fondo de Ahorro de Panama, Panama’s sovereign wealth fund, (hereinafter, “FAP” or “Fund”) announces its audited consolidated annual financial results for 2016 and key management initiatives.
For the year 2016, the Fund generated a gross return of 3.45%. In terms of net income, the Fund closed the year at USD 40.1 million. The Fund’s 2016 results is a product of a conservative strategic asset allocation, particularly relative to our positioning of our fixed income, equity and cash assets portfolios, in the face of a mixed global financial environment for the asset classes. Net assets totaled USD 1,265 million, 3.3% higher in comparison to the 2015 period. (Access our Annual Report 2016 in Spanish here).
For the 2016 period, the Fund generated USD 26.1 million in interest and dividend income, greater than in the 2015 period (USD 24.4 million). Fixed income and equity portfolios yielded a net realized gain of USD 9.6 million, while unrealized gains totaled USD 7.7 million (2015: USD -36.4 million). Operational and administrative costs for the year came in at USD 3.4 million (2015: USD 3.5 millions), as several cost reduction initiatives were incorporated. The above resulted in a net income of USD 40.1 million for the year, compared with USD -4.1 million last year.
The FAP’s financial results are largely associated with benchmark performance and its strategic asset allocation (diversification), which seeks moderate returns and reduced risk, in line with our long-term profile. Other market factors that contributed to the performance were: 1) higher fiscal stimulus expectations for the US economy, and potential infrastructure investments and reduced regulatory environment, in the context of a new administration; 2) for emerging markets economies, satisfactory response in terms of monetary policy and a decrease in the correlation with some commodity prices played a role, and 3) better performance of high quality sovereign debt, given the uncertainty in the political arena, impacted the asset class positively towards the end of the third quarter of 2016.
Key Management Initiatives and Goals
In 2016, we focused primarily on:
- The international competitive bidding process for our global custodian services, resulting in the selection of The Northern Trust Company.
- Updating our regulatory and governance framework through the adoption of new investment directives from settlor and Investment Policies from our Board.
- Strengthening our investment management capabilities with the signing of an amendment of the technical cooperation agreement with the World Bank.
- The development of the Fund’s strategic asset allocation for the 2016/2017 period.
We are also proud to announce that the Fund ranked No. 2 globally in transparency by the Sovereign Wealth Fund Institute. This is another proof of our commitment to adopt strong governance principles and employ transparency initiatives useful to the public.
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
*It is understood by Financial Statements “Consolidated” the set of accounting records that make the Fondo de Ahorro de Panama as they are: i) the Technical Secretariat / Budget of the FAP and ii) the FAP Trust Agreement, using as reference the established in the Article No. 23 of Law 38 of June 5, 2012, and not a consolidation as defined in NIIF 10 for the preparation of financial statements.