More conservative on international issues, more risk-taking on local issues.
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International Assets
We continue to recommend increasing the weighting of assets that are less sensitive to interest rates, such as cash, value stocks, international stocks, and real assets.
Cash: We have upgraded our rating from moderate to high
Given the current interest rates at the short end of the yield curve, we find U.S. Treasury bonds with maturities of 1 to 6 months to be more attractive.
Fixed income: We continue to maintain a strong conviction in this asset class
(+) What we mainly see is relative attractiveness compared to equities (a yield spread favorable to fixed income).
(+) In addition to attractive yields that can be found on high-credit-quality securities. (IG YTM ~ 5.5%)
(-) Although we expect interest rate volatility to remain high for some time until there is consensus on the outlook for growth and inflation.
(+) The fixed-income allocation consists primarily of U.S. Treasuries and U.S. investment-grade credit.
With regard to the portfolio’s duration, we have been gradually increasing it to a more neutral level of around 4 years. The main trigger for extending it is reaching a ceiling on the rate, which we currently believe is between 4.5% and 5.0%.
Equities: We maintain our low conviction with an underweight rating, although at current levels (around 4,000 points), we see the S&P 500 near its fair value
(-) There aren't many incentives to take on risk in stocks (the yield spread favors fixed income).
(-) Equity risk premium at low levels given the current context (S&P 500).
(+) We maintain a more constructive outlook on countries outside the United States—particularly China—through our Series A shares.
(+) In terms of investment styles, we maintain a value bias in most regions, with the exception of Japan and emerging markets.
Alternatives: We maintain a neutral stance
Private debt: We see opportunities in this vintage in the distressed debt segment, with conditions more favorable for underwriters than for borrowers.
Real estate: This is the market we have found most challenging, as cap rates have generally not adjusted—or have yet to adjust. We view the single-family and multifamily residential segments as the most resilient and attractive within the U.S. real estate market.
Private equity: We see opportunities in secondary fund strategiesthat are able to acquire investments from other LPs at attractive discounts.
Local Assets
They offer an attractive risk-return profile, given the ongoing macroeconomic rebalancing and the easing of political and institutional risks.
Cash: Attractive rates, but we see more opportunities in fixed income and equities.
Fixed income: Maintain positioning at the short end of the curve. Neutral exposure to UF.
(+) More attractive rates following recent adjustments.
(+) Over the past 12 months, the short end of the yield curve has risen sharply, creating an attractive risk/return profile and pushing long-term rates to lower levels.
(-) Corporate spreads are widening slightly, given the increased risks to growth, but remain below pre-pandemic levels.
Equities: IPSA offers an attractive risk-return profile.
One of the few global markets with the potential for multiple expansion. High dividend yield. Potential for CLP appreciation in line with the depreciation of the DXY and rising commodity prices.
(+) IPSA offers a substantial discount compared to its peers and its own historical prices.
(+) Attractive dividend yield 8.5%.
(-) Earnings are being revised downward for 2023.
Dollar: The exchange rate is beginning to align with its fundamentals.
(+) Attractive carry.
(+) Better terms of trade.
(-) In real terms, the peso no longer appears to be undervalued.
We find the $780–$800 range attractive for resuming dollar purchases.
