Political Changes in Latin America Drive Asset Flows to U.S. Offshore Market

November 15, 2022 — Boston

By 2026, offshore exposure to reach $333 billion, up from $198 billion at the close of 2021

There has been a resurgence of affluent-investor flows to the U.S. offshore market since 2019, as the Latin American region copes with left-wing governments, swooning real estate prices, and poor outlooks for local currencies and GDP growth, according to Cerulli’s latest report, Latin American Distribution Dynamics 2022: Radical Shifts in Demand Present Challenges for Global Managers.

Top-line growth of the mutual fund industries in Argentina, Brazil, Chile, Colombia, Mexico, and Peru will average 12%, with cross-border exposure growing 15%–18% per year vs. 9%–10% for domestic exposure. By 2026, offshore exposure is projected to hit $333 billion, up from $198 billion at the close of 2021. Most of these new allocations will go to active managers instead of exchange-traded funds, according to the findings.

As affluent investors consider investment options in a challenging political and economic environment, large financial institutions in South America have teams set up to advise clients on their offshore portfolios domiciled in the U.S. and elsewhere. “The increased presence of offshore advisors working in Latin American capitals has been the most important driver helping affluent investors make the leap into the offshore market,” states Thomas Ciampi, author of the report. Nearly $65 billion in fund AUM has been raised via advisor-client relationships in the Mercosur (Uruguay/Argentina/Brazil) and Andean regions (mostly Chile/Peru/Colombia). Global asset managers are actively boosting their wholesaling presence in Latin America, hiring full-time staff and setting up permanent offices around the region.

The market is responding to investor interest in non-traditional products that can’t be obtained in local Latin markets, and global platforms providing independent broker/dealers with a wide range of solutions at the touch of a button. The research recommends that managers consider bringing non-traditional products that can’t be obtained in local Latin markets or funds that are typically offered by large-scale firms.

Given the fragile nature of most regional economies and distrust of the new wave of left-leaning governments, the wealthy will continue to move money outside of Latin America. The challenge faced by global managers is bolstering their ability to service a distribution landscape that has grown increasingly stratified and disaggregated. “While tremendous progress has been made on various fronts, making offshore investing more acceptable and accessible, managers need to invest more time and effort in developing and maintaining relationships with a growing number of financial advisors,” concludes Ciampi.

Looking for More Information?

Let's Connect

Looking for More Information?

For additional information regarding this material or to get in touch with our press team, please submit the below form.

We use cookies to improve your site experience, distinguish you from other users and support the marketing of our services. These cookies may store your personal information. By continuing to use our website, you agree to the storing of cookies on your device. For more information, please visit our Privacy Notice.