SUMMARY OVERVIEW

• After a forgettable 2021, it has been a good start to the year for local fixed income. During the first quarter, returns on the main fixed income indices have been positive, above their historical averages.
• The attractive interest rate differentials that have attracted foreign capital inflows, the perceived moderation of the new government in terms of prioritizing "fiscal responsibility," and the attractive yields offered by this asset class following the rate hikes observed in recent months have contributed to this trend.
• Looking ahead, we project high inflationary accruals, increasing the attractiveness of UF-indexed instruments. The real curve with a duration of around two years is where you should position yourself if you are thinking about hedging against inflation.
• Market rates factor in that the Central Bank will continue to raise the MPR over the next three months, but we would already be closer to the end of this adjustment cycle.
• Among the risks, the progress of the constitutional process, which has been more radical than expected, stands out. Added to this is a bill for a fifth withdrawal from the AFPs. With this, the political scenario will continue to be one of the key factors going forward for this asset class.
• Our Fynsa Deuda Chile fund maintains an attractive risk-return ratio through a defensive strategy that favors shorter durations (1.7 years) and high-quality issuers to reduce volatility, while maintaining YTM levels (around 8.6%).

RETURNS

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

LOCAL TAXES

• Local rates during 2022 have resumed part of their historical correlation with their counterparts in the US economy. Local rates during the first quarter remained under slight upward pressure in line with international rates.
• Over the last 12 months, the yield curve has risen sharply, especially for maturities close to one year, creating attractive risk/return positioning.

INFLATION AND TPM

• The market forecasts high inflation rates for the coming months, increasing the appeal of UF-indexed instruments.
• Market rates factor in that the Central Bank will continue to raise the MPR over the next three months, but we would already be closer to the end of this adjustment cycle.

INVESTMENT FLOWS

• Increased institutional and retail demand

INVESTMENT DECLINE: Fynsa Debt Chile Fund

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

Humberto Mora

Gerente de Inversiones Finanzas y Negocios Corredora de Bolsa