Chilean fund industry to grow with new law-Larrain

Chile’s $42 billion investment fund industry could grow “considerably” after the government passes new legislation to simplify its legal framework, Finance Minister Felipe Larrain said on Friday.

Speaking to reporters at the New York Stock Exchange, the minister said the new legislation to be sent to Congress next year will bring more competition and halt regulatory arbitrage between different classes of funds.

“As a result, we expect it to bring more participants to the market and more companies willing to set up investment funds,” the minister said.

He estimated the new legislation will be in effect at some point in the first half of 2011, after Congress approves it.

Chile currently divides its investment funds into five classes: investment funds, mutual funds, funds for the investment of foreign capital, funds for the investment of foreign venture capital and funds for home savings purposes.

Each of these classes is governed by specific legislation. The government says that separation in many cases lacks technical justification and creates confusion among investors.


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