Panama SWF mulls foray into alternatives

The Fondo de Ahorro de Panama is currently studying what parts of the alternative asset universe would best fit its risk profile.

Fondo de Ahorro de Panama, the sovereign wealth fund of Panama, is currently considering investing in alternatives assets, according to its chief executive officer and chief financial officer Abdiel Santiago.

“We're looking at that possibility,” he said during a panel at the Emerging Market Private Equity Association's global private equity conference on Tuesday in Washington. “First we have to define what alternatives are.”

The $1.4 billion fund is currently invested in public securities, predominantly – about 80 percent – in fixed income, with the majority of that in the US. It also has about 15 percent of its assets in public stocks.

Santiago noted that if private equity were to be one of the strategies within alternatives, “we could see at least 5 percent, perhaps 10 percent” of total assets invested there. It is very early stage for the sovereign wealth fund, which was created in 2012. 

Santiago explained to Private Equity International that the fund is in the process of defining which strategy within alternative assets would best fit its needs. 

“We've been thinking about it for the past two to three years,” he said. “It could mean anything, so we have to define what fits our risk profile.” He added while it would take at least six months to define, private equity could be the right strategy if the sovereign wealth fund can sustain the illiquidity premium. “That's possible.”