The Fondo de Ahorro de Panama Announces Audited Consolidated Annual Financial Results for 2017 and Key Management Initiatives.
Panama | March 31, 2018
The Fondo de Ahorro de Panama, Panama’s sovereign wealth fund, (hereinafter, “FAP” or “Fund”) announces its audited consolidated annual financial results for 2017 and key management initiatives. *
For the year 2017, the Fund generated a gross return of 6.39%. In terms of net income (after costs), the Fund closed the year at B/. 76.6 million. ** The Fund’s results are a product of a conservative strategic asset allocation, in particular the positioning relative to our portfolios of fixed income, equity and cash assets, in the face of a positive global economic backdrop, geopolitical uncertainty, and low financial markets volatility, but with rising equity prices. Net assets of the Fund totaled B/. 1,310 million, 6.4% higher in comparison to the 2016 period. (Access our Annual Report 2017 in Spanish here).
In 2017, the Fund generated interest and dividends of B/. 31.5 million, greater than in the same period 2016 (B/. 26.1 million). Fixed income and equity portfolios generated a net gain of B/. 49 million for the year (2016: B/. 17.3 million). Operational and administrative costs of the Fund closed for the 2017 period at B/. 3.9 million (2016: B/. 3.4 million). The above resulted in a net income of B/. 76.6 million, which compared favorably with previous year results of B/. 36.5 million.
The Fund’s financial results are mainly associated with the benchmark performance and the strategic asset allocation, which seeks to obtain moderate returns and risk in-line with our long-term profile. During 2017, the performance of the FAP was led by the equity portfolio’s 24.8% return, driven by information technology and financial sectors, and European stocks. Our global fixed income portfolios ended the year at a moderate 3%, as expectations for U.S. inflation and rates rises by the Federal Reserve increased.
The investment management of the FAP 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 and Goals
Below are our key management initiatives and goals:
- Executed the global custody services contract with The Northern Trust Co.;
- Obtained membership in the International Forum of Sovereign Wealth Funds ("IFSWF");
- Implemented the Annual Investment Plan and expanded the portfolio with the creation of a global fixed income portfolio, an inflation-indexed bonds portfolio and a short duration portfolio;
- Executed and implemented the securities lending program, with the purpose of generating additional returns and reducing net custodianship costs.; and
- Received approval by the Fund’s Board of Directors for the alternatives investments benchmark.
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.
** 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.