DJ Chile Sovereign Wealth Funds Obtain 7.6% Return In 2008

Mon. May 04, 2009; Posted: 02:39 PM

SANTIAGO, May 04, 2009 (Dow Jones Commodities News Select via Comtex) -- SOVW | Quote | Chart | News | PowerRating -- Chile's sovereign wealth funds posted a return of 7.6% on the year in 2008 when markets saw sharp volatility, especially in the fourth quarter, Finance Minister Andres Velasco said Monday.

Chile created two funds, the Economic and Social Stabilization Fund and the Pension Reserve Fund, in 2006 to save the windfalls from high international copper prices.

"In a year with tremendous international instability, as was 2008, a year in which the vast majority of sovereign funds saw steep losses, Chile's funds posted positive returns," Velasco told reporters.

He added that the funds are solely invested in fixed income, and will not vary from fixed income until market volatility dies down.

Since their inception in 2006, the funds have posted returns of 9.5%, according to the ministry.

This year, Chile is withdrawing $4 billion from the more than $20 billion in the funds, to finance its fiscal stimulus package. One billion dollars are earmarked to partially finance state copper giant Corporacion Nacional del Cobre's 2009 $2 billion capital expenditure budget, while the other $3 billion aim to finance infrastructure plans, employment subsidies and direct transfers, among others.

In late March, the Finance Ministry, through the central bank, began selling dollars, at the rate of $50 million a day for a total of $3 billion, to finance the peso-denominated stimulus programs.

-By Carolina Pica, Dow Jones Newswires; 56-2-820-4244; carolina.pica@dowjones.com

(END) Dow Jones Newswires

05-04-09 1439ET

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