The Mutual Fund Available in Guaraníes celebrates today a new anniversary of its creation. On this occasion, we recall the path that was taken to make this investment instrument inspire more experiences in pursuit of growth and sophistication.
The financial crisis of the 1990s left deep damages to the Paraguayan economy and, at the time, also meant the disappearance of mutual funds as an investment instrument in our country, as a consequence of the disgrace of the Velox Group (owner of the bankrupt Banco Alemán-Paraguayo), which also had a fund management company.
Later, in 2008, the international financial crisis thwarted the first attempt to make inroads into mutual funds that deployed CADIEMwhich had consisted of a 20% shareholding in a group of shareholders that ultimately could not cope with the immense volatility that followed that global upheaval.
The challenge of being the first Mutual Fund
It was in 2012 that CADIEM made the decision to start a new process, but already to be owners of the 100% of the fund manager. At that time, a capital opening was made as a brokerage house and some clients were invited to be part of it; with that capital increase, CADIEM Administradora de Fondos was opened, with the minimum capital of USD 500,000 that was required at that time.
Almost two years later, after a process of designing the IT system, on March 5, 2014 the Fondo Mutuo Disponible Guaraníes was launched, which was the first fund of the new era of mutual funds in Paraguay. Eleven years after that date, this market is today in a stage of full consolidation and on its way to continuous expansion, with more than ten fund managers and close to USD 1.5 billion in assets under management.
César Paredes, president of CADIEM Administradora de FondosThe company's CEO, Mr. Méndez, highlights the growth of the mutual fund market in our country and its contribution to the development of the financial system, although he recognizes that there is still a lot of room for further progress.
"The Mutual Fund Available in Guaraníes was the only fund in the market for about three years, which was a period in which we wanted to see how the product was doing in the market. Then, Puente and Investor, administrators not related to banks, opened funds and already afterwards, about 7 years ago, banks started to look at this as an alternative to offer to their clients", relates Paredes, regarding the steps that followed the first mutual fund they had launched in 2014.
The assets managed by the Fondo Mutuo Disponible Guaraníes are currently around G. 700,000 million and it manages the investments of around 8,000 clients. It is aimed at optimizing resources in Guaraníes in the short term and invests in fixed-income instruments, such as government bonds and securities of financial institutions rated A-py or higher. It has an AAf py risk rating granted by Fix Scr S.A. and, depending on the average monthly investment, seeks an average return of 5.50% to 6.25%.
Mutual Funds as an accessible investment instrument
"The mutual fund is the starting instrument in the market, it is like people start with funds, then they specialize and take other types of instruments that arise in the capital market. These immediate liquidity funds are mainly designed for companies, but it is interesting that many people also use them as a temporary investment alternative.
It is the alternative to the savings bank that pays 0.5% or 1%, while the funds are yielding over 5%", says César Paredes, regarding the opportunities offered by these investment instruments. Following the success of the Mutual Fund Available GuaraníesCADIEM has made available to the market three more funds; the Mutual Fund Available USDthe Mutual Growth Fund and the Mutual Fund for All.
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