From the consulting firm Ciedess they point out that the rise in the rate applied by the Central Bank also had an impact on the more conservative selective. The riskiest funds post gains in October.
Fund E continues to deepen its decline so far in 2021. And without brakes. According to a report prepared by the consulting firm Ciedess, so far in October -with quota values as of the 25th- the most conservative selective of the pension system falls 7.35%, about to close its worst monthly performance since created the multi-fund system. In general, this selection includes the people closest to retirement age.
“Fund E is heading for its worst performance in history, due to the fact that last month it registered a fall of 4.35% and in October 2019, when the social outbreak occurred, it registered a decrease of 3.26%,” said the consulting firm linked to the Chilean Chamber of Construction.
Meanwhile, the riskiest funds, A and B, registered increases of 1.85% and 0.40%, respectively, while the moderate-risk fund C presented a negative variation of 1.99%. For its part, fund D shows a decline of 5.37%.
The fourth retreat
What explains the falls of the most conservative selective? In the case of C, D and E funds, Ciedess pointed out that they were mainly impacted by the results of investments in local debt securities, as well as the performance of foreign fixed income instruments.
It should be remembered that in the case of fund E, 95% of its investments are in fixed income.
“There is an increase in the interest rates of the national fixed income instruments after the increase in the Monetary Policy Rate (MPR) of the Central Bank above what was expected and the uncertainty regarding a new withdrawal of pension funds has impacted negatively to conservative funds through capital losses, “added the consultancy.
In addition, there is an increase in the interest rates of the Central Bank bonds at five and 10 years, both in pesos and in UF.
The collapse of fund E in the year
According to Ciedess, so far in 2021, mixed results are seen for the multifunds.
On the side of fund E, it has not stopped falling and marks a historic fall of 20.31% in the period. According to what the AFP Association has pointed out, with no other economic crisis the aforementioned selective had registered a decline like the current one.
Rise of the dollar and world stock markets
On the other hand, the good monthly performance shown by funds A and B is explained by the variation in the prices of equity instruments.
“Positive performances are observed in the main international indices and a rise in the dollar, being slowed down by the fall at the local level,” Ciedess said.
He added that despite the fact that markets continue to be affected by the uncertainty of the pandemic, this month in particular highlights the weakening of both the real estate crisis in China and the global energy crisis.
In that sense, he detailed that the world index, the MSCI World Index, registers an increase of 5.10%, while the Wall Street indices, the Dow Jones and the S&P 500, obtain gains of 5.61% and 6, 01% respectively.
Meanwhile, the stock market indicators for Europe -MSCI Europe- and Asia, MSCI EM Asia, show positive results of 4.07% and 3.74%, each.
For its part, the emerging markets index, the MSCI EM, shows a positive result of 3.52%.
So far this year, funds A and B register gains of 11.93% and 5.82% in 2021, respectively, while C presents a negative variation of 4.83%. The D, meanwhile, loses 15.17%.