Equities expect boost.

U.S. and European stocks will be targeted by Mexico's second-largest pension fund as it starts investing in equities under new regulations that took effect on January 17.

Afore Bancomer managers say they want to "diversify the fund and the country risk," according to Bloomberg News. The Afore Bancomer pension fund manages US$8.7 billion, second only to Citigroup Inc.'s Afore Banamex.

The new rules allow pension funds to invest 15 percent of assets in stock-related instruments and as much as 20 percent outside of Mexico, Bloomberg reported. Previously, these funds--14 such pension funds manage about US$42 billion of workers' savings--were only allowed to invest in government and corporate debt.

Most pension fund managers in Mexico are expected to focus on investing abroad rather than in Mexico, according to a January 14 report by Credit Suisse First Boston cited by Bloomberg. The report indicated the funds would "invest 3.3 percent of assets in Mexican stocks, which would pump as much as US$14 billion into the equity market."