This year they had their moment of splendor. When City analysts were asked how to take shelter from local risk, many of them gave two words in response: Latin American funds.In fact, the migration to these instruments allowed many investors to dodge the famous "reperfilation."
But now the good performance of these assets was truncated, not only because of the social upheaval that plagues the region (which, strictly speaking, did not affect yields so much), but rather because of the restrictions imposed by the Argentine government: cepo " Kill "political risk.
What to do then to protect the savings from the uncertainties that lurk in the short and medium term? The specialists of the City propose from the liquidity of a money market through the ETF and American Treasury bonds to risk strategies that bet on some local bonds, both in pesos and dollars, that could be "saved" from future surprises on the debt.Blessed stocks
"The graphs tell us that the assets under management of the category contracted since the PASS. They stabilized at a level of US $ 250 million per day.""The fall is mainly explained by the bailouts. While the funds created value, investors decided to rescue their capital," says Nicolás Max, director of asset management at Criteria, which owns a supermarket of funds with 22 product families of several managers. (www.fondosonline.com).
Sergio González, CFA analyst at Criteria, states in a dialogue with iProUP that the assets of funds that invest abroad were reduced, measured in dollars, and that this "was not a matter of performance but a consequence of net bailouts."
"Chile felt the impact on performance due to the greater political risk. The same happened in Brazil with the release of Lula. But we must remember that these are short-term securities and good credit quality. In any case, the fall recorded is insignificant for the parameters we are used to in Argentina, "he adds.
For Max, the problem facing this class of assets is also operational, since they don't raise funds other than via cable dollar. "
"The investor with cable dollar accesses other less risky funds and with same returns on offshore accounts. While there are exchange restrictions, these funds will not be able to grow in equity via subscriptions," he says.
As these are offshore bonds, they can only be subscribed through the cable dollar or counted with liquidation ("liqui"). Thus, with the first "light stocks", these funds were beaten.
In fact, it takes between a year and a year and a half for performance to barely compensate for the cost of taking out the dollars of Argentina (the "liqui" means turning dollars abroad buying bonds in pesos in the local market and then selling them in hard currency in New York)."We recommend that individuals who have pesos available go to the money market or channel if money in some funds of financial trusts to bet on the rate in pesos, without direct sovereign risk," says González.
In dollars, of course, it is already more difficult to avoid local risk. In the City they assure that many opt directly for the offshore account and those of greater patrimony are beginning to seek to build "trust" before the rumors of a tax (it is a structure that splits certain assets from the patrimony and puts them in the name of a legal person different).
They even ensure that there are beginning to be consultations for the change of fiscal residence either in Uruguay or Paraguay. Recently, Paraguay relaxed the rules for the entry of Argentine capital and will surely soon be imitated by other countries.Returns, without much punishment
Francisco Matigg, strategy analyst at Consultatio Financial Services, says that the impact of political events on Chile's credit is not so dramatic.
"If we take, for example, the Chile 2029 bond we see that it fell 3.7% since the beginning of October, versus a 1.3% decline in the EMBI Global index, which measures emerging bonds in general," notes Matigg.Chile and Brazil are usually two heavyweights in these portfolios, which by regulation must be invested 75% in Mercosur and Chile.
"Obviously, if the political situation worsens, it could translate into lower bond prices since the effects on the macro economy will become more evident. It is also important to note that in Chile the exchange rate also adjusted quite a bit and that improves the external position of the country, which helps offset the impact on dollar bonds, "Matigg tells iProUP.
"The same thing happens in Brazil, but the impact on bonds is even smaller. Brazil 2028 has been almost stable since the beginning of October. When analyzing the behavior of Latam funds, an important issue is that many invest in corporate debt in dollars, which has a correlation with what happens with government bonds, although they are not the same, "he adds.
In his vision, events that fully impact public debt can trigger some friendlier behaviors with creditors in those companies and that makes up for that.
To put the scenario in perspective, remember: "We are talking about a very cyclical asset class and exposed to risks such as the price of commodities, the global slowdown and the rise in international rates."Local risk with "gambeteada"
Alejandro Bianchi, founder of asesoredeinversiones.com, understands that today there is no greater attraction in these funds or in LATAM and proposes alternatives with Argentine risk but at least have a good chance of beating inflation, on the one hand and avoiding restructuring, by other.
"Although in Chile there was a market rebound, it is not yet clear that it is the final floor. Only in a few months will that country make the popular consultation for the reform of the Constitution and they would have it by November 2020, which comes for long what is happening in the region and the possible solutions, "he says.
"I see that there may be a greater increase in country risk in several territories and it seems to me that debt is being placed at ridiculous rates, which are not subject to real levels of risk, such as Chile issuing at 1.60% at 10 years", Tell iProUP.
"It was something that didn't make much sense. They had done things better than us, that's for sure, but I don't know if enough to place 10 basis points above the US Treasury bond. Markets sometimes exaggerate," complete iProUP.In another order, it proposes a position in pesos and dollars for brave people who allocate at least part of their assets to a local portfolio.
"Although the scenario seems complicated to the back, I think it can be even more complex forwards. The disarmament of the Leliq can cause inflation to accelerate and that would leave us in one of possible hyperinflation. In that sense we must cover 50 % or a little more, "he acknowledges.
"We came from suffering a repercussion even of the letters in pesos, which is something that usually did not happen. But forward the elected government does not seem to be afraid to print unlike the respect that the current government showed in that regard to not generate more inflation ", Explain.
It suggests keeping a part in pesos adjusted by CER "with a bond such as PR13, which is the CER title par excellence, due in 2024 and which pays interest and amortization every month." Today it is paying an IRR (internal rate of return) of 56% plus inflation.
Bianchi contextualizes: "A lot of people use this type of instrument to have a flow of funds, an income, a little luck every month. That is why I think it is more difficult for them to play it. The probability of being taught is low."And of course, a portion must go to dollars, in a country where we know, the currency can often run faster than inflation, as the specialist warns.
"Today you have short dollar bonds with an IRR of 61% but that includes the potential of not being paid." It is the risk of restructuring or default that is implicit in the prices.
"It is not clear yet what is going to come in and what is not. A restructuring was suggested that only took into account bonds until 2024 but I think it can include until 2028 so it would avoid everything that expires before that date," he recommends.
"And I also believe that they have more chances to charge or receive in any case better treatment titles with New York law. That is why I would favor a Discount with that jurisdiction," he risks.
For those who were for example in Latam and today prefer to escape the political anxiety that crosses the region, says that "with ETFs you can invest outside anywhere in the world. There is no need to be exposed to Argentine risk if you do not want to ".
In fact, the universe of ETFs (Exchange-Traded Fund for its acronym in English or investment funds with a stock exchange) is vast, since there are instruments that replicate indices that follow certain geographical regions, certain assets or types of assets or Good stock indexes of countries.Two strategies to shield
Ramiro Marra, director of Bull Market, which owns one of the largest fund-based supermarkets in the market, says he is now looking for other directions. "Latam funds, especially fixed income, have minimum weights in Mercosur. Unfortunately we lost Chile as a country of regional refuge. Although we do not believe that Chileans will commit suicide with the referendum of April 2020, the problems are going climbing, "he says.
"Today the suggestion is to reduce exposure in these funds and migrate to companies that behave as corporate fixed income, even if it seems strange, companies like Coca Cola, Mc Donald's and Wallmart, called countercyclical, that pay dividends quarterly and are very stable even before a crisis abroad, could serve as a refuge for holders of pesos to seek coverage in dollars and make a fee, "he told iProUP.
He added: "Now if you have the dollars, the suggestion is to move to funds that have US Treasury bonds and cash because we believe that 2020 will be moved as an election year in Latin America, with legislative ones in Chile, Brazil, Ecuador, Colombia and Peru and US presidents I think we are probably at the doors rarely seen in stock market history. "
To top it off, Nicolás Galarza, from Quiena, puts things in perspective: "Most of our investors are Argentine. Before the STEP, the queries and the number of clients and deposits doubled. But what you have to understand is that in There is really no such thing as a good time to enter and it is very difficult to take the timing of the market and position itself before the others, so the best thing to be really protected is to build a well-balanced portfolio that manages to maintain the return but reduce the risk in time. It is the formula for removing volatility from the head. "