Liquidity, a product of different variables linked to the current situation, seems to continue to be a characteristic of the local market. Therefore, the Mutual Funds (FCI) They are seeking to adapt (and quickly) to this… Thus, in recent weeks, the daily liquidity options for the industry have been growing; and they cover both pesos, like dollars.
But let’s be more specific. On the one hand, let’s delve into the funds of LECAPs T+0Specifically, it was the combination of the fall in BCRA interest rates and the beginning of a new era of Treasury Bill issuance – under Caputo’s management, and within the framework of changes in monetary policy – that drove the emergence of this new segment.
What are the new Mutual Funds?
Its objective is to provide an option to the traditional Money Market, offering a higher return, but without losing (as a benefit) daily liquidity. They are positioned as an alternative for conservative profiles, and recommended for transactional pesos with an investment horizon of between 15/40 days.
If we talk about returns, these funds move in a TNA between 42% and 45%which compares with the average of 35% offered today by MM T+0. While its performance so far this month is around 3%, a few points above the Money Markets and similar to that of short-term Fixed Income (T+1).
In terms of composition, your portfolio totals between 85/95% of your assets. LECAPs at different terms (and hence the name with which they are identified), while the rest is usually liquidity in FCIs MM. Although it can also add other income instruments to some extent short term fixedHowever, it is important to understand that this will determine the potential risk of these funds.
In fact, this point precisely marks its great difference with respect to the MM. What do we mean? The market risk of your portfolio due to the assets it is composed of; and therefore, its potential greater volatility. Specifically, this leads to an average volatility of around 3%, compared to a MM that operates around 2% and short-term fixed-income strategies that move around 4.5/5%.
It is also important to highlight that some of these funds are new, and others are a conversion of T+1 Fixed Income funds. (today, and after the change in market settlement, called Short-Term Fixed Income). In fact, this last category also includes funds with portfolios mainly in LECAPs, although they maintain their settlement period at 24 hours.
Now, going to its attractiveness, the movement of the flows shows that there is interest. In the few months that they have been around (about two months since they began to appear), the Fixed Income Lecaps add up to net subscriptions of more than $280 billion. Even in the month, they accumulate income slightly above the Short-term fixed income.
However, inIn terms of assets, they are not yet relevant, representing 1% of the total. A long way from the Money Markets with 60%, and Fixed Income Bonds which are currently 8%.
What future does the new mutual funds have?
Regarding the future of these funds (and the concentration of their flow), it will depend on how the LECAP curve is constructed – in terms of rates and terms – and logically the implicit risk that the market measures in these assets.
But not only the options for pesos with daily liquidity have attracted attention in recent times. Alternatives for Money Markets in dollars, refugees clearly interested in giving cash dollars a more attractive rate than traditional options are beginning to appear.
Although they are still doing so in an incipient manner, the questions remain. What do they invest in? Mainly in bonds, remunerated accounts and fixed-term deposits. The yield, on the other hand, is in the order of 2/2.5% per year. And one of its advantages, logically, is its liquidity.
In this line, We hope that new options will be added, especially if the restrictions are lifted.
In conclusion, the industry shows – once again – its quick response to adapt to the situation. Even here, tied to a new law, it can add the response to the new shares in the funds that the new money laundering will surely generate.
Director of PPI.
Source: Ambito
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