Since the creation of the multi-funds, the results for 2022 would be the second worst cumulative performance for funds A, B and C after the losses of 2008 in the context of the subprime crisis; while for fund E this would be the third best historical performance.
The pension multifunds will close this 2022 with mixed results, with the funds A, B and C scoring their worst second ever performance.
Meanwhile, so far in December with quota values as of the 25th -and according to a bulletin from the consulting firm Ciedess- all funds post negative returns.
In the current month the riskiest funds, A and B, register losses of -4.04% and -2.76% respectively, while the Fund C, of moderate risk, presented a drop of -1.56%.
The most conservative funds, D and E, obtain falls of -0.67% and -0.25% each.
According to the report, the monthly results of multi-funds A and B were influenced by “the poor results of international equities and the strong fall in the dollar; while at the local level there is a slight decrease in the IPSA”.
On the other hand, the profitability of funds C, D and E is mainly explained by the results of investments in local debt securities, as well as the performance of foreign fixed income instruments.
Only funds D and E are saved in 2022
The main factors that impacted the uneven performance of the multi-funds in 2022 were the persistent economic and political uncertainty in the markets (due to the pandemic and the Russia-Ukraine conflict), added to the threat of a global recession and inflationary pressures, which led to banks to raise interest rates.
According to Ciedess, so far in 2022, between January and December (with quota values on the 25th), the riskiest funds, A and B, register losses of -20.49% and -15.66%, respectively; Meanwhile he Fund C, of moderate risk, presents a fall of -9.22%.
The most conservative funds, D and E, obtain gains of 0.35% and 7.38% in 2022.
“Since the creation of the multi-funds, these results would be the second worst accumulated performance for funds A, B and C, after the losses recorded in 2008 in the context of the subprime crisis; while for fund E this would be the third best historical performanceafter the returns of 2009 and 2019 ”, detailed the consultant.
Reasons for poor performance
According to Ciedess, the annual result of multi-funds A, B and C is mainly explained by the variations in the prices of variable income instruments and the dollar.
“Negative results are observed in the main international indices, being partially offset by the rise of the dollar; while at the local level there is a significant increase in the IPSA”, he said.
In detail, the markets were affected by the pandemic, the Russia-Ukraine conflictthe fight against persistent inflation and fears of a global recession.
In this regard, the historic interest rate hikes in different countries, especially in the United States and Europe.
“For its part, China has been affected by the strong restrictions in the context of the pandemic, the crisis in its real estate sector and falls in its economic growth projections,” added the consultancy in its analysis.
In the case of the conservative funds, D and E, Ciedess said that influenced the results of investments in local debt securities and the performance of foreign fixed income instruments.
“At the international level, international fixed income registers a negative contribution; while at the local level there is a significant drop in the interest rates of fixed-income instruments, positively impacting conservative funds through capital gains”he stressed.
Lastly, the study center commented that “the latter is mainly due to what happened in November, within the framework of a CPI much lower than expected, being a turning point in the trend observed throughout the year and reducing future inflation projections.