Managers of pension fund Penzijni fond Ceske pojistovny (Czech Republic) announced they would start investing in structured products related to 300 publicly traded European companies thanks to changes in the law governing the industry

Managers of pension fund Penzijni fond Ceske pojistovny (Czech Republic) announced they would start investing in structured products related to 300 publicly traded European companies thanks to changes in the law governing the industry. PF Ceske pojistovny and other private pension funds got an opportunity to expand their investment strategies this spring, when the government loosened regulations on private pension funds. The change permits them to invest in the corporate bonds of foreign companies and share funds in countries belonging to the Organization for Economic Cooperation and Development (OECD). The relative newness of private pension funds in the country -- the first funds arrived on the scene in 1994 -- resulted in government efforts to safeguard against fraud. As the funds have proven themselves, the government has begun to ease restrictions on investments. Private pension funds were previously only allowed to make foreign investments in bonds issued by the governments and national banks of OECD members. "I am convinced this is a step in the right direction and it will prove beneficial for pension-fund clients," said Ivo Foltyn, general director and board chairman of PF Ceske pojistovny. Foltyn is convinced investment in foreign securities will increase diversification of pension portfolios, which, he said, will increase profits and improve risk management. "We expect a dramatic increase in the amount of money managed by pension funds, up to billions of crowns, in the coming years," he said. Investors have been frustrated by the lack of movement on the Prague bourse and welcomed the chance to seek greater investment outside the country. "The Czech capital market is still relatively small and not fully developed," Foltyn said. While diversification into foreign markets and foreign currencies will allow local pension funds greater freedom to invest, Foltyn said PF Ceske pojistovny would maintain the majority of its portfolio in Czech crowns since its clients expect to be paid in crowns.