Evaluate This

How has the volume of assets under management (AUM) in Colombia’s fiduciary sector changed over the past few years?

When one uses AUM to assess the development of the sector, one must understand that it is possible to have a high volume of AUM with a very low turnover. For this reason, it is better to talk about commissions, the number of operations you manage, and the volume. Thus, AUM is a good tool to evaluate the fund management sector. The trustee sector experienced a very interesting trend in 2013; the volume of operations rose, but at the same time income volume fell. That was due to a loss in the net asset value (NAV) of funds experienced last March, after which many people retrieved their investments. At the same time, there was a crisis of sorts in the entire public trustee segment. Therefore, we saw a very important reduction in commissions from the public segment, as well as those from fund management. In this context, we are a trustee firm with slightly different processes, and 2013 was a very good one for us in terms of growth and profit. The sector tends to be much more linked to the fund management segment, whereas we have a higher participation in the trustee line.

What type of trustee companies can foreign investors find in Colombia?

It depends very much on the type of business investors want to focus on. For example, if they target infrastructure, then they should look for a trustee bank, as they have a wide knowledge of the sector and impressive capacities. However, if the business requires management operations, then it would be better to resort to an independent trustee company. I think it is also important to keep in mind the location of the trustee firm, as this is key to knowing in which area you want to focus your activity.

How significant is the real estate business for the company’s overall activity?

We enjoy a strong position in the real estate market. The real estate sector brings together certain elements that are key for us, such as being able to target diverse investor types, from very small to multinational, depending on the stage of each project. This sector also enables us to manage operations and activities with different risk profiles. Our role is to facilitate a constructor’s access to different markets. We are an independent trustee firm that has the capability to access the market in different ways and target different types of investors. Our clients have a long-term vision and aim to hold assets for a long time period, meaning less rotation and speculation.

What is the potential of the Colombian real estate sector when it comes to attracting foreign investors?

The return an investor can expect from the real estate sector naturally enough depends on the level of risk they assume. Having said that, Colombia is a very attractive market with high growth levels; unemployment levels are on the decline, which brings more people with purchasing power to the market, fuelling the urban reconstruction that many cities are undergoing.

What impact does the governments’ regulatory reform have on Colombia’s asset management sector?

The asset management industry is mainly a fixed-income market, as the country has historically suffered from high levels of inflation. At the same time, other markets, such as derivatives, are only in their infancy. The evolution of this industry will be linked to large investors. Regarding the reform, it has barely just come into force, and we should keep in mind that it was developed with special attention to those companies that aim to become active industry players. Nevertheless, I do believe we will begin to see new and more specialized products reaching the market.

What projects have you been most proud of?

We are especially proud of the fiduciary rights-based projects we have developed over the years at Acción Fiduciaria—in other words, those popularly known as crowd funding. Thanks to groups of small investors, we have been able to carry out many large projects that have become very important for the history of Colombia.

What’s the strategic reason behind your expansion to Panama?

To put it simply, we wanted to become a bilingual company, and expand our activities; we had many projects priced in Colombian pesos and realized that we needed to expand to markets that use the US dollar. Colombia still has some bureaucratic barriers when it comes to dealing with US dollar-based projects. We see Panama as a country that can help us attract further small international investors and showcase Colombia’s developments to the world.

Where do you see Acción Fiduciaria in five years time?

Our priorities for the next few years include developing new markets for investors interested in fiduciary rights-based projects; also, as the public-private partnership (PPP) model becomes more popular, trustee companies will have the challenge of providing solutions to investors. We also believe that private banking will become widely common over the next few years and perceive considerable potential there.

How can the trustee industry benefit from the Pacific Alliance?

It is a very interesting initiative, because, apart from Chile, the remaining countries have a trustee industry that is very much institutionalized. I think there’s a potential for trustee networks between countries and common alliances to benefit regional clients. We should be able to develop a common regulatory framework to better attract investors. The concept is suitable for countries operating similar economic models, and the road ahead is promising, if challenging.

Would Europe be an interesting market for Acción Fiduciaria to expand its activities to?

We are currently holding talks to try to show our European counterparts in Spain and Italy the benefits of the Latin American model. Chief among them is its greater flexibility when it comes to tackling financial crises that would render them much more dynamic in their current conditions, especially as these economies advance on the road toward recovery.

© The Business Year – June 2014