Authors:

• Eduardo Walker, Professor, Catholic University of Chile.
• Marta Del Sante, Assistant Professor, Catholic University of Chile

Overview:

This paper seeks to examine legislation and practices in Chile, Colombia, Mexico, Peru and Uruguay, in relation to the valuation of trusts from the standpoint of investment in them by the pension funds, in order to reach conclusions regarding the best methods for its application in Uruguay.

Although there is no single valuation methodology, almost all of them seek to approximate the economic value of the underlying investments. This paper reviews these methodologies, reviewing both the legislation and the concrete practices used for different types of trusts.

The paper examines a stylized case using different valuation criteria, which enables establishing a parallel between them. Methodologies for calculating discount rates are also presented. The specific methodologies found for different types of trusts in different countries are then summarized, and conclusions are presented. The Exhibits are then presented, including a summary of valuation methodologies according to IFRS, NIC 40 specifications (relevant for real estate) and finally, the summaries of the laws of each country and the percentages of investment of the pension funds in trusts in different countries.

Note: This paper was funded by the AFAP of Uruguay (AFAP Integración, AFAP SURA, AFAP República and AFAP Unión Capital). AFAP SURA also provided a summary of regulations and valuation practices in LATAM.

To review this study (onlye the Spanish version available) in detail, please download it here.