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Saturday, September 24, 2022

Investments: opportunities and challenges for the second half

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Refering to breakdown of supply chains, reference is made to the shortage in the supply of goods as a result of logistical problems, mainly in China, caused by the closure of factories due to outbreaks of Covid-19. In this sense, the news of lax restrictions in the Asian country are seen positively by the market, since they contribute to the reactivation of economic activity. Nevertheless, the Russia-Ukraine conflict It continues to be a hot topic given that Russia is an energy power and the largest supplier to the European Union, therefore, insufficiencies in the supply of energy have their correlate in prices (and in inflation).

The second half continues to be challenging due to the global risks mentioned above and because it is not an easy task to find returns that exceed inflation, but there are options in the spectrum of fixed income assets to try to mitigate the impact of the loss of purchasing power . When we mention fixed income, we refer to bonds that can be issued by governments or companies and have an interest and capital payment structure with specific dates, which are stipulated at the time of issue. Despite the fact that these titles suffer from oscillations of supply and demand; On each payment date, the issuer will disburse what has been agreed.

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For investors with a very conservative profile, there is the possibility of buying short-term United States Treasury bonds (6 months – 1 year) with yields of 2.9% and 3.2%, respectively. These are the bonds known as “risk-free” that are usually a minimum rate reference for other types of issuers. Also, it is possible to acquire bonds from companies with a high credit rating, such as the Ford Motor Co bond maturing in 2026 that offers a return of 4.5%. For more moderate profiles, the guaranteed bond of the Brazilian oil company Petrorio maturing in 2026 with a yield of around 7%.

On the other hand, locally through Balanz, you can access a universe of funds that replicate the main trends and investment strategies worldwide, such as the fund New Capital Global Equity Conviction, ideal for those profiles who want to bet on a market recovery through a flexible strategy that moves between Value and Growth companies in the United States and the rest of the world, seeking to identify the best opportunities within each sector and region. For investors who want to be able to capitalize on a recovery in fixed income, we suggest taking a position in the Neuberger Berman Short Duration Emerging Market Debt Fund, which invests from time to time in corporate and government bonds from different emerging countries. It should be noted that, unlike bonds, investment funds do not have specific payment dates, but interest and principal payments are constantly reinvested.

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In short, the beginning of the new semester would seem to have renewed expectations within the investing public. Although analysts expect the positive data to be confirmed in the coming months to have a clear trend, we believe that for some profiles it may be interesting to start taking a position in some of the proposed risk assets.

Director Wealth Management Balanz Capital

Source: Ambito

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