/ New Maximum TERs for Chilean Pension Fund investments

June 14, 2023

Most drop, except for ETFs and alternatives.
Period July 1, 2023 to June 30 2024.

Felipe Cousiño

On June 12, 2023 the Chilean securities, banking and insurance regulator (Comisión Para El Mercado Financiero – “CMF”) published for comment the proposed new annual rule whereby it jointly sets with the Chilean pension regulator (Superintendencia de Pensiones– “SP”) the maximum fees and expenses (“Max TER”) that may be borne by Chilean pension funds. The excess over such Max TER must be borne by the pension fund managers (“AFPs”).

The main changes proposed by the regulators can be summarized as follows:

1. The  Max TERs will, for the most part, be lower than  for the previous period, except for ETFs, where only emerging market equity ETFs drop, and most alternative assets, which rise. There is a reduction of 1 to 4 basis points for domestic and foreign mutual funds compared to last year, except for high yield, emerging markets and balanced mutual funds, whose Max TERs remain the same. In the case of alternatives, those whose Max TER rose the most were private credit funds (31 basis points), private credit funds of funds (20 basis points) and private equity funds (13 basis points), to 2.36%, 3.97% y 2.25%, respectively.

2.  The case of ETFs was somewhat disappointing, as it was expected that the Max TER rule might this year make a distinction between the fees of actively managed ETFs and passive ETFs. Unfortunately, the same Max TERs continue to be applied to both.

3. In other respects, there were no changes, meaning that the same updated data bases (Morningstar for registered funds and Preqin for private equity and private credit) were used to calculate the Max TERs, and the same percentiles were used for the statistical methodology to determine which funds to consider within the relevant data bases.

The following is chart showing the old and the new (proposed) Max TERs:

Foreign and domestic mutual funds and domestic Closed-End Funds (transferable)
Asset type Geographical Zone Business style Old Maximum TER New Max TER
Stocks Developed, Emerging and Index 0.32% 0.31%
Developed and Global Others 1.00% 0.99%
Emerging Others 1.23% 1.19%
Bonds Developed Index 0.13% 0.11%
High Yield 0.80% 0.80%
Others 0.64% 0.62%
Emerging 0.94% 0.94%
Global 0.74% 0.71%
Balanced 0.97% 0.97%
Liquidity 0.19% 0.17%
Exchange Traded Funds (ETF)
Asset type Geographical Zone Business style Old Maximum TER New Max TER
Equity Developed and Global 0.60% 0.60%
Emerging 070% 0,69%
Bonds Developed and Global Others 0.36% 0.38%
Emerging 0.50% 0.50%
Developed and Global High Yield 0.50% 0.50%
Alternative Assets
Investment type Old Maximum TER New Maximum TER
Private Equity (includes co-investment) 2.12% 2,25%
Private Debt (includes co-investment) 2.05% 2.36%
Private Equity Funds of Funds 3.84% 3.87%
Private Debt Funds of Funds 3.77% 3,97%
Domestic Closed-End Real Estate and Infrastructure Funds 2.02% 2,00%
Gold ETFs 0.80% 0,88%


If you need more information, please do not hesitate to contact our capital markets team.