Social and Economic Stabilization Fund

Chile US$ 15.2 Billion Origin: Copper

Profile Directories

Sovereign Wealth Funds

Public Funds

Established: 2007
(1987 Copper Stabilization Fund)

Transparency Rating: 10
View Sovereign Fund Transaction Data
Firm Investment Style: Index
Entity Structure: Fund
Population Est.: 17.2 million – 2013
Wealth Per Capita Est.: $871

Fund Details

Strategies and Objectives

Asset Allocation

Fixed Income Managers

Equity Managers

Consultants and SPs

Key Executives People


Main Office
Ministry of Finance
Teatinos 120
Santiago de Chile
Tel: +56 2 2828 2000

Governance
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Chile Social and Economic Stabilization Fund

Summary
On March 6, 2007, the Economic and Social Stabilization Fund (ESSF) was created with an initial contribution of US$2.58 billion. It replaced the old Copper Stabilization Fund.

Background
The Copper Stabilization Fund was created in 1985 and in 2006 Chile passed the Fiscal Responsibility Law which involved the creation of two new sovereign wealth funds. The first of these is the Pension Reserve Fund (PRF) which is essentially a Savings Fund (no withdrawals are allowed to be made from the fund for a minimum of ten years). This fund receives between 0.2% and 0.5% of GDP depending on the size of Chile’s overall budget surplus each year, and initially received a one-off sum of $600 million in 2006 to kick-start the fund.

In 2007, the Chilean Government created the second fund, the Economic and Social Stabilization Fund (ESSF). This fund replaced the original Copper Stabilization Fund. It receives fiscal surpluses which are above 1% of GDP and came into existence with a one-off payment of approximately $5 billion (as a result of the closure of the original Copper Stabilization Fund. Through the ministry of finance of Chile, the financial committee proposed investment policy on the social and economic stabilization fund to the minister of finance during March of 2007. The investment strategy intends to diversify assets in the fund, putting 15% of the portfolio into variable income assets, 20% in corporate fixed income papers, gradually adjusting assets currently held, and especially liquid assets.

SWFI Note: The Chilean sovereign wealth funds were historically aggregated into one profile.