SUMMARY VISION

• After a 2021 to forget, it has been a good start to the year for local fixed income. During the first quarter, the returns of the main fixed income indices have registered positive returns above their historical averages.
• The attractive interest rate differentials that have attracted foreign flows, the perceived moderation towards the new government in terms of privileging "fiscal responsibility", added to the attractive yields presented by the asset class after the rate hikes observed in recent months, have contributed to this trend, added to the attractive yields of the asset class following the rate hikes observed in recent months, have contributed to this trend.
• Going forward, we project high inflationary accruals increasing the attractiveness of UF-indexed instruments.. The real curve with a duration of around 2 years is where to position for inflation hedging. is where to position for inflation hedging.
• Market rates have incorporated that the Central Bank will continue to raise the TPM during the next three months, but we would already be closer to the end of this tightening cycle.
• Among the risks, the progress of the constituent process, which has been more radical than expected, stands out. In addition, there is now a project for the 5th withdrawal of the AFPs. With the above, the political scenario will continue to be one of the key factors going forward for the asset class.
• Our Fynsa Deuda Chile fund maintains an attractive risk-return ratio, through a Defensive Strategy, favoring a shorter duration (1.7 years) and high quality issuers to reduce volatility, but maintaining YTM levels (around 8.6%).

RETURNS

• During the first quarter of the year, the returns of the main fixed-income indices posted positive returns above their historical averages. have posted positive returns above their historical averages.

LOCAL RATES

• Local rates during 2022 have regained some of the historical correlation they had with their U.S. peers. Local rates during the first quarter remained slightly upwardly pressured in line with international rates.
• In the last 12m, rate curve sharply upward, especially in terms close to 1 year, giving room for attractive risk/return positioning.

INFLATION AND TPM

• The market projects high inflationary accruals for the following months, increasing the attractiveness of UF-indexed instruments.
• Market rates have incorporated that the Central Bank will continue to raise the TPM during the next three months, but we would already be closer to the end of this tightening cycle.

INVESTMENT FLOWS

• Increased institutional and retail demand

INVESTMENT DOWNGRADE: Fynsa Deuda Chile Fund

• Defensive strategy, favoring shorter duration (1.7 years) and high quality issuers to reduce volatility, but maintaining YTM levels (around 8.6%). For more details see HERE

Humberto Mora

Assistant Investment Manager Finance and Business Finance and Business Brokerage Firm