Open AccessStrategies in Retirement Fund Selection in the Mexican Retirement Market 1997-2018
Author(s) -
Luis Raúl Rodríguez-Reyes,
Ángel Samaniego Alcántar,
Mireya Pasillas
Publication year - 2021
Language(s) - English
DOI - 10.21919/remef.v16i0.657
Subject(s) - contrarian , investment strategy , investment (military) , novelty , product (mathematics) , pension , hedge fund , task (project management) , retirement age , investment management , originality , business , economics , finance , actuarial science , market liquidity , management , philosophy , geometry , theology , mathematics , politics , political science , law , creativity
Objective: This research studies individual investment strategies that can be employed by Mexican workers to choose a retirement savings company, to provide evidence that can guide workers and governments in their pursuit for a higher replacement rate. Methods: To accomplish such task, more than 200,000 individual decisions in rolling-windows are simulated, based on more than twenty-years of market prices on retirement funds in Mexico (1997-2018). Outcome: Results indicate that contrarian-based strategies dominate momentum-based strategies in three out of four categories of funds. Recommendations: Moreover, in two out of four categories of funds the highest return is reached by the system’s average, calling for the introduction of an ETF-type of product to the Mexican financial market. Originality: The novelty of this research resides in the perspective of the analysis, positioning the Mexican worker in the role of an investor making a financial choice. Conclusions: The maximum average return is the best way to select a retirement fund manager when there is a guaranteed minimum pension, which acts as a risk-hedge, as it is in the Mexican case.