Recommendations As Moral Performativity Device: The Case of ‘Felices y Forrados' and Chilean Pension Funds.

Saturday, June 25, 2016: 9:00 AM-10:30 AM
258 Dwinelle (Dwinelle Hall)
Juan Felipe Espinosa, Pontificia Universidad Católica de Valparaíso, Valparaiso, Chile
Recommendations as Moral Performativity Device: The Case of Felices y Forrados and Chilean Pension Funds.

This paper presents a case of an information intermediary that acts within the Chilean Pension System. Since 2002, a multi-fund system was created where all AFPs offer five funds to investors, ranging from Fund A holding mostly risky stocks to Fund E holding mostly risk-free government bonds1. In Chile, pension funds investors often switch their entire pension investments between funds holding mostly risky stocks to funds holding mostly riskfree government bonds in an endeavor to ‘time the market.’ These relatively frequent portfolio rearrangements are organized across a huge amount of individual investors by ‘Felices y Forrados’2 -FyF, an investment advisory organization that use social media as its central communication and service commercialization channel.  Da et al. (2015) claim the explanation of financial economic effects on flows and prices of the Chilean Capital market it is the massive FyF use of social media communication channels3

An interesting point and much less studied issue about FyF case is their alignment alongside with a generalized social movements critique (Fleet, 2011) to the economic system and in particular the APF system. The company web site and communications through social networks mix up testimonies of their users that by the effect of FyF recommendations increased their pension fund, and hard critique to AFP system. For example, FyF publicly criticize the fusion between funds administration companies that ‘easily pass’ the regulatory scheme to avoid huge tax payments of around 115 millions in the case of Cuprum (one of the oldest AFP) and Argentum (a novel one). FyF’s always-visible general manager had even called to create a citizen-based AFP –inspired in the social citizen movements that began all over Chile in 2011.

FyF is a company that acts as a ‘parasite’ (Serres, 1980). That is, FyF offers information based on the Chilean capital market asymmetry, and at the same time, they put forward their political and moral views about the AFP system and economic system as a whole. As a consequence, FyF is part of a complex economic agencement (Phillips, 2006 and Callon, 2008). This agencement includes, between others, FyF recommendations, FyF political stands about the AFP system and the economy in general and interestingly, the market actors as AFPs itself, regulators and any other actor that operates within Chilean capital market that is affected by FyF recommendations. FyF CEO claims that: ‘our strategy is more to avoid losses than ‘time the market’. Maybe in the first phase, because we didn’t have enough experience and our impetuosity, we always were communicating that we beat the market. That was a communicational problem of our earlier times’ (The Clinic, 2015). This movement towards the care of the investor and its related notion of avoid their looses, shows a clear moral discursive take that is embedded in the whole FyF recommendation device. Following the notion of moral capital, Ariel Wilkies (2015, p. 765) claims that there are ‘diverse mechanisms at work which shape the virtues required to access a loan. These ‘prostheses’ of the market agents are formatted by discourses, organizational rituals and technologies.’ This is what the author calls ‘moral performativity’ in reference to how are those ‘virtues’ being formatted. Following Wilkies this paper call to open up the black box of morality in markets (Fourcade and Healy, 2007 in Wilkies 2015, p. 777)

The paper builds over an ongoing project about the Chilean Capital Market4 based on an ethnography of Chilean Trading Desks –Market Making Traders (Abolafia, 1996)- and interviews with Chilean traders from investment banks, insurance companies, AFPs and several market regulators. Following Zaloom (2012) Studying financial traders is a productive way to understand the distinctive morality that emerges through the practice of exchange in local and global markets. To observe the operations of this group allows the researcher to have a vantage point of view of the market, because this market maker trader is located ‘at the center of the market’ and he is the one that ‘trades for their own account while providing continuous bids and offers to a diffuse population of investors and speculators located throughout the world' (Abolafia, 1996: 2-3)

1 In fact, there are five types since 2002. A: The Most Risky; B: Risky; C: Intermediate; D: Conservative and E: More Conservative.

2 ‘Happy and Filthy Rich’ could be use as a close expression to the investor’s advisory organization.

3 As a consequence, pension fund companies had been regularly facing change requests amounting to 10% of their domestic equity and 20% of their bond portfolios within a few days (Da et al., 2015). Rubilar et al. (2014) claim that this interesting intermediaries exploit market asymmetries.



Abolafia, M. (1996). Making Markets: Opportunism abd Restraint on Wall Street. Cambridge, MA: Harvard University Press.

Da, Z., Larrain, B., Sialm, C., & Tessada, J. (2014). Price pressure from coordinated noise trading: Evidence from pension fund reallocations.Available at SSRN 2558773.

Fleet, N. (2011). Movimiento estudiantil y transformaciones sociales en Chile: una perspectiva sociológica. Polis (Santiago)10(30), 99-116.

Fourcade, M., & Healy, K. (2007). Moral views of market society. Sociology,33(1), 285.

Gutierrez, M. (July 19th, 2015). Gino Lerenzini: La mente tras Felices y Forrados que prometía mejorar las pensiones de todos los chilenos. The Clinic Online. 

Rubilar, C., Venegas, C., Vallina, A., & De La Fuente, H.  (2014) El Comportamiento de las AFP y el Desempeño de los Fondos de Pensiones en Chile Durante la Crisis de Wall Street (2006-2011). Proceedings del XXX Encuentro Nacional de Facultades de Administración y Economía. 

Serres, M. (1980). Le parasite. Grasset.

Zaloom, C. (2012). Traders and market morality. The Oxford Handbook of the Sociology of Finance, 169.

Zurita, F. (2005). Proyección del Fondo de Pensiones y Análisis de su Efecto en el Mercado Financiero. Superintendencia de AFP. Serie de Documentos de Trabajo. Documento de Trabajo N°2. Abril.

Wilkis, Ariel. "The moral performativity of credit and debt in the slums of Buenos Aires." Cultural Studies 29, no. 5-6 (2015): 760-780.