Introduction to Private Markets and Afores
Private markets refer to investments in assets that do not trade on public stock exchanges, such as private companies, real estate, and infrastructure. According to Tarek Chouman, Global Head of Aladdin Client Business at BlackRock, investing in private markets will enable Mexican Afores (private pension funds) to reach the next level in performance and efficiency.
Afores’ Leading Role in Private Market Adoption
During a key conference at the Amafore 2025 Encounter, Chouman highlighted that Mexican Afores have been at the forefront of other pension funds worldwide in adopting private markets.
“Technology, private markets, and investment will allow Afores to take the next step, elevate their performance and efficiency while enhancing their reporting capabilities,” stated Chouman.
Understanding Private Market Investments
Unlike publicly traded stocks, private market investments typically require longer capital lock-up periods and have lower liquidity, explained Juan Hernández, Director of Latin America at Vanguard in a separate interview.
Hernández elaborated that Mexican Afores can invest in private markets through three instruments: CKDs, CERPIs, and private debt. These were specifically designed for Afores to diversify their portfolios.
“Ultimately, it’s a way for Afores to broaden their investment options,” Hernández emphasized.
Moreover, Hernández pointed out that private market investments have existed for many years but were previously more restricted to large institutional investors.
“Why were they more limited for institutional investors? Because you need a certain level of sophistication and scale to analyze them,” Hernández, Director of Latin America at Vanguard, explained.
Challenges and Opportunities in Private Markets
Chouman acknowledged that increasing transparency in private markets is a challenge, but achieving it would be a significant benefit for the Mexican market and Afores.
During the conference, Chouman asserted that Artificial Intelligence (AI) is crucial for Afores, helping them improve efficiency, identify new opportunities, become more competitive, and enhance performance.
He further explained that AI can serve as a tool enabling investors like Afores to better evaluate investment alternatives in private markets.
Key Questions and Answers
- What are private markets? Private markets refer to investments in assets that do not trade on public stock exchanges, such as private companies, real estate, and infrastructure.
- Why are private markets important for Afores? Investing in private markets will elevate Afores’ performance and efficiency, allowing them to diversify their portfolios and tap into new investment opportunities.
- What challenges do private markets present? Private market investments typically require longer capital lock-up periods and have lower liquidity compared to publicly traded stocks.
- How can AI benefit Afores in private markets? AI can help Afores improve efficiency, identify new investment opportunities, become more competitive, and enhance overall performance by better evaluating private market investment alternatives.
- What is the significance of increasing transparency in private markets? Increasing transparency in private markets will benefit both the Mexican market and Afores, making these investments more accessible and understandable.
