Box 3: Active Management of Foreign Reserves - Foreign Reserves Management Report, 2025
La Constitución Política de Colombia y el artículo 14 de la Ley 31 de 1992 asignan al Banco de la República la función de administrar las reservas internacionales. Las opiniones y posibles errores son responsabilidad exclusiva del autor y sus contenidos no comprometen al Banco de la República ni a su Junta Directiva.
The management of foreign reserves follows two investment styles: passive and active. The objective of the former is to replicate, as closely as possible, the risk characteristics of a benchmark index while aiming to generate positive returns and minimize transaction costs. The latter allows deviations from the benchmark index composition within predefined limits to obtain higher returns. In 1994, Banco de la República established an active management program under which portfolio managers invest the allocated resources in accordance with specifc investment guidelines and a defined risk budget. Since its inception, active management has outperformed the benchmark index by 9 basis points (bps) and by 10 bps over a five-year window; that is, had the portfolio been managed exclusively under a passive approach, its performance would have been lower.
