Background on Afores and Their Role
Administrators of Retirement Savings Funds, known as Afores in Mexico, are responsible for managing the retirement savings of millions of working individuals. These funds invest workers’ hard-earned money in various financial instruments, such as stocks and government bonds, to generate higher returns and increase future pension payouts. With over 69 million accounts under management, Afores play a crucial role in ensuring the financial well-being of Mexican workers during their retirement years.
Impact of Trump Tariffs on Afores
In April 2025, the Afores experienced losses amounting to 31.674 billion pesos due to the market instability caused by tariffs imposed by U.S. President Donald Trump. This marked the first month with negative performance since the beginning of 2025, as international financial markets were shaken by the U.S.’s trade policies.
Market Stabilization in May
However, the National Commission for the System of Retirement Savings (Consar) reported that by mid-May, there had been a favorable trend with plusvalías (gains) of 109.180 billion pesos by the 13th of May.
“At the beginning of April, the trade policy implemented by the United States created financial market volatility on an international level. As more information became available, financial markets began to stabilize,” explained Consar in an informational card.
Afores Investment Composition
More than 53% of Afores’ investments are in Mexican government debt, while 6% is allocated to the Mexican stock exchanges and 13% to international stock exchanges. The remaining investments are diversified across other instruments, including private national debt, Fibras, and international debt.
It’s essential to note that Afores’ investments are long-term, so the performance of a single month or even a year does not determine their final returns.
Current Afores Status
As of the end of April, the Afores managed a total of 69.18 million retirement savings accounts, with assets valued at 7.189 trillion pesos, according to data released by Consar.
Key Questions and Answers
- What are Afores? Afores, or Administrators of Retirement Savings Funds, are organizations responsible for managing retirement savings accounts in Mexico.
- How do Afores generate returns? Afores invest workers’ savings in various financial instruments, such as stocks and government bonds, aiming to maximize returns for future pension payouts.
- What caused the losses in Afores in April 2025? The losses were primarily due to market instability resulting from tariffs imposed by U.S. President Donald Trump.
- What percentage of Afores’ investments are in different asset classes? More than 53% are in Mexican government debt; 6% is invested in the Mexican stock exchanges; and 13% are allocated to international stock exchanges. The rest is diversified across other instruments.
- How long are Afores’ investments? Afores’ investments are long-term, so short-term market fluctuations do not significantly impact their overall performance.
- How many accounts and assets does the Afores system manage? As of April 2025, Afores managed over 69 million accounts with assets valued at approximately 7.189 trillion pesos.
