Swaps Bets Backfire, Wiping Out Billions From Funds in Chile

Chile’s pension regulator says the market value of foreign interest-rate derivative positions held by AFP pension funds swung sharply—from a $1.4 billion gain to a $7.7 billion loss by September. The change reflects how fast hedging positions can move when rates and currency factors shift. With those swings eroding results, AFPs are racing to close out their U.S. bets, according to the regulator’s figures. The brief report also signals broader pressure on retirement fund performance as managers adjust risk exposures tied to global interest rates. The regulator’s updated data frames the magnitude of that stress on Chile’s system.