The agreement with the Fund and the reconfirmation of the same strategy of the Central Bank (BCRA), caused a change of direction when deciding what to do with the available pesos and tilt the balance from the dollar towards CER-adjusted instruments from of $50,000 and in the case of other instruments, for small investors, one option is ETF Cedears.
- Cedears ETF: Values start at $1,000 (for the ARKK) up to $6,000 (the highest value is the XLF). The most recommended are: SPDR S&P 500 (SPY), is the most popular as it includes the 500 largest companies in terms of market capitalization. It is the most acceptable for all types of investors. Taking into account the international context, another option may be financial ETFs such as The Select Sector Financial (XLF), which will stand out this year due to the Fed’s rate hike, although it is one of the most expensive. The last recommended option is the XLE of the energy sector.
- Fixed terms adjusted for inflation: the UVA fixed term makes it possible to have an interest generated by a fixed rate and a variable component, which is determined by inflation. Adjusted according to the CER index (Reference Stabilization Coefficient) reported by the Central Bank, on the variation of the Consumer Price Index with a lag of 30 days. In some cases, according to the Bank operated, they offer up to 1.5% more on the adjusted value.
The Bond Outlook
Walter Morales, Chairman of Wise Capital gave a first glimpse of what is expected for -at least- this first semester: “CER bonds seem to us to be a good alternative, especially those with positive rates.”
In this sense, he suggested the investment in pesos in four bonds: TO23 (fixed rate), T2X2, TX23 and TX24 (all adjusted by CER). “Thinking that the BCRA will increase the interest rate to be able to have effective mini-devaluations, the Badlar bonds such as PR15 and the PMJ23 of Mendoza. Now, beyond the effectiveness of the rate increase, the exchange rate acceleration is with us and hastening the step, so we must have Dollar Linked bonuses like T2V2 and TV23”.
“Once the default scenario is cleared, the country risk should go down, which would imply increases of 10% in the price of bonds in dollars. Within this context, bonds such as AL29 and AL30 are excellent chances to capitalize on that 10% in dollars Morales said.
On the other hand, John Manuel Franco, SBS Group Economist consulted by Ambitsuggested a strategy for the first few months that could change later: “In the announcement of the understanding with the IMF, both President Alberto Fernández and Economy Minister Martín Guzmán assured that a devaluation jump would not take place. We believe that for the moment It is true that this jump can be avoided, but we expect a greater rhythm in the rate at which the official dollar increases”.
In this context, for conservative profiles that are characterized by seeking investments that represent moderate growth without assuming significant risks, he recommended hedging strategies “that aim to protect capital against current nominal pressures.”
These profiles could see value in mutual funds such as SBS Renta Pesos FCI, which provides adequate exposure to CER debt, and in SBS Capital Plus FCI, which is basically a currency hedge fund that maintains positions in dollar-linked bonds and in strategies with dollar futures. Riskier profiles could see value in sovereign bonds in dollars, for which we estimate interesting returns in the medium term even in stress scenarios”.
Matthew Reschini, Senior Research Analyst at Inviu was also consulted by Ámbito and suggested not making major changes in the portfolios: “For now we remain cautious before making major changes and we highlight that while the sovereign bonds in dollars showed some volatility in their prices with the uncertainty of the agreement, the equity remained more stable. Therefore, if you wanted to bet on a resolution of the negotiations, perhaps stocks are a bet with a little less downside than bonds. However, it is still equities and these operations correspond to a more aggressive profile”.
Dollar Linked bonds were another of the strategies used in 2021 that did not have a good result. That is why, clearing up the possibility of an exchange rate jump, for Inviu “this would leave these products without great attractiveness and with the negative rate that they quote, they are at a disadvantage compared to CER products.” “For investors who want or need to stay in pesos, it seems like an interesting opportunity given that abrupt drops in inflation are not expected for this year either,” Reschini said.
In that case, he proposed for conservative profiles, the CER Megainver Absolute Return fund, which has several bonds and bills that follow inflation and focus on the short term. For moderate profiles, they recommend the TX24 in particular, which, yielding 1.22% above inflation, is the first of the CER bonds to trade with a positive rate. “The latter is very important since inflation expectations and the comparison with other rates mean that the aforementioned bonds are trading at negative rates,” added the analyst.
Lastly, for those with a riskier profile and who are looking for higher returns at higher risk, bonds such as TX26 and DICP are recommended. “With the warning that, if expectations of price increases suddenly drop or the market loses interest in the CER curve, they will be the most punished,” he concluded.
Source: Ambito
David William is a talented author who has made a name for himself in the world of writing. He is a professional author who writes on a wide range of topics, from general interest to opinion news. David is currently working as a writer at 24 hours worlds where he brings his unique perspective and in-depth research to his articles, making them both informative and engaging.
