Within the framework of an electoral year crossed by various proposals, some already known and others more disruptive, the search for hedging-oriented instruments intensifies and, there, appear the Mutual Investment Funds (FCI) as one of the most attractive options. According to a private report, industry equity presented an increase of 77% compared to December 2022, although it had a yield of 56.4%, somewhat below accumulated inflation.
The data comes from the Argentine Chamber of Mutual Investment Funds. In July, the stock of the FCI presented an increase of 12.5% or $1.35 trillion with respect to the previous month, thus reaching $12.08 trillion. Compared to December last year, the equity increase was close to 80%, at $5.26 trillion. Likewise, in the first seven months of 2023, the accumulated return of the industry was 56.4%, (3.85 trillion), compared to inflation of 60.2% in the same period.
The most demanded FCIs
The most demanded fundsaccording to the Adcap financial group, are the most conservative, such as Money Market (MM), which today represent 50% of the fund industry.
“Money Market investment funds are used for treasury cash management and for investors with very low appetite for risk, which is why they are the most used in Argentina,” they explain. They offer immediate liquidity and are free from price fluctuations. They registered positive net flows of Ch$448,031 million in July, which was reflected in a patrimonial increase of 8.2% per month. In the seventh month of the year, the money market funds showed a positive return of 7.1%, but 50.5% on average for the year to date.
To start operating in the Money Market, it is required to open a brokerage company or an investment account in the bank of which you are a client. Once this step has been completed, with minimal requirements the operation can be carried out. Whoever transfers their money to the fund buys a certain number of “quotas”, whose price grows daily from the interest generated by the placements made by those who manage the fund.
Secondly, there are those funds that offer devaluation hedge (dollar linked), which are 8.5% of the total, and the so-called T+1, which represent 7% of the fund industry. During the past month, Fixed Income funds posted positive net flows of $82,441 million, which translated into a 2.4% monthly increase in assets. CAFCI indicates that the monthly yield was positive at 7.2%, for $250,143 million, as a result of the performance of portfolio assets. Overturned so far in 2023 an average return of 60.1%. Finally, there appear CER funds (indexed to inflation)with 4%, according to Adcap.
“The FCI whose objective is to hedge against inflation have been doing a very good job, but we also have others linked to local equity that are very useful. Then, there are others that, because they are linked to an asset class that is not performing well, may be suffering a little more, but that depends on the choice of each investor. The industry in general has a wide range of products and I think they are playing a very good role in this challenging scenario”, adds Andrés Reschini, from F2 Financial Solutions.
In any case, in the middle of the year, the volatile performance of the flows was characteristic of the FCI industry. For June, the result marked a deeper red compared to March, with immediate liquidity funds ranked as the biggest losers by subtracting more than $235,000 million, according to information from Florencia Bonacci, financial analyst at Portfolio Personal Inversiones (PPI). At that time, net outflows (regarding flow) represented 2.4% of the industry’s total assets. In any case, far from the marked decline of 10% after the debt reprofiling in August 2019.
Likewise, according to data from Bonacci, in the first semester the industry grew 57%, above the inflation accumulated in the same period, around 53%. Meanwhile, investors seek to diversify their portfolio, mixing the placement in pesos and dollars until the end of the year, in an electoral context marked by uncertainty and economic programs with profound differences in their proposals.
Source: Ambito
