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ARTÍCULO
TITULO

Indexing Pension Funds with Exchange-Traded Funds

Maria Alcina Rodrigues Batista Sanfins    
Antonio Marcos Duarte Júnior    

Resumen

This article considers the use of Exchange-Traded Funds (ETFs) for indexing the portfolios of pension funds in Brazil. A methodology is proposed to allow the portfolio managers to combine ETFs and the assets composing its benchmark. The methodology is based on a mathematical programming model, with the resulting problem solved by any global optimization algorithm. The results obtained for two ETFs ? BOVA11 (indexed to the Ibovespa) and BRAX11 (indexed to the IBrX-100) ? are presented for illustrative purposes. All constraints imposed by the Brazilian regulatory environment have been incorporated in the studies presented. The methodology proved to be an interesting alternative to pension fund managers, with good results with respect to the control of tracking errors.

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