Where to put the money in liquidity to attack the market

There is a lack of visibility in the market, and the key to achieving it lies in inflation. Waiting for signs that it has peaked, that the central banks have finished raising interest rates in an attempt to contain it and to know what the impact of all this will be on the economy, the managers are cautious about when building their portfolios, and defend the importance of liquidity in a context like the current one. For the investor in funds who wants to adjust the risk, he has the option of transferring his investment without tax toll to a monetary fund, with which he will preserve the capital.

This type of product, which by definition invests in very short-term fixed-income assets, such as bills, promissory notes or repos, is emerging as a valid alternative for both conservative and more aggressive investors. In the case of the former, which this year suffer average losses in their portfolios of around 10% ( the highest in the last 30 years ), they are a way of being in liquidity while waiting for the return on deposits to be even higher. attractive.

The Spanish financial sector already pays an average of 0.63%fixed terms (between one and two years) of families, according to the latest data from August from the Bank of Spain. A level that is still low, but that has not been seen since 2015. Although the large banks rule out a deposit war like the one that took place a decade ago and, for now, only the smaller banks are raising the returns on their fixed terms , the forecast is that the European Central Bank (ECB) will continue to raise interest rates to around 3.25% in the first quarter of 2023 and this will inevitably force the remuneration for liabilities to be revised upwards.

In the case of aggressive investors, money market funds can also be useful to reduce exposure to the market, or to protect long-term earnings, waiting for the uncertainty to dissipate and the future to become clearer. time to go on the attack. The extra difficulty that the market presents this year is that the correlation between the stock market and fixed income is positive, that is, the price of both falls at the same time -something that has happened rarely in recent decades-.

And the losses are also large in both cases. “We live in unprecedented times and navigate unknown waters in view of the social, political and financial events that are taking place throughout 2022,” they indicate at Unicorp. This is being reflected in the main world markets. The losses of the bags exceed 20% in the year, and those of many bonds as well. In the case of global prices, this is the biggest drop since at least 1990, which is the latest data offered by Bloomberg.

The decrease in the price of fixed income has, however, caused a normalization in its yields, which has led many experts to begin to see opportunities in this asset while remaining cautious with their exposure to equities. According to the latest survey of Bank of America managers,exposure to this asset is the lowest in history.

“There are short-term fears. As long as central banks do not lift their foot on the accelerator of monetary tightening, the outlook for risk asset markets can hardly be optimistic, also taking into account that the risk that monetary policy generates a recession is becoming more pronounced,” says Enguerrand Artaz, fund manager of the French manager La Financière de l’Echiquier.

The best ‘mattresses’
In this context, which experts describe as volatile and complex, the Spanish investor can find almost 140 money market funds in euros, which have fallen, on average, by 0.58% this year according to Morningstar data. However, “between now and the end of the year, money market funds should offer returns of more than 2.25%, according to our expectations,” they indicate in Groupama.

To choose one, two variables must be taken into account. One of them is the commissions that apply, and the second is the minimum investment, since the best ones usually require high minimums or are even only available for institutional ones. You have to find a balance between the two, but there are options. Among those available to the private investor, it is possible to find one that resists positively this year. This is AZ Fund 1 AZ Alternative – Capital Enhanced B-AZ Fund Acc , from the manager Azimut Investments, which obtains a return of 0.69%. In the long term it has also preserved capital well. In other moments of strong market falls, such as those that occurred in the last quarter of 2018, this vehicle saved the furniture with a drop of 1.06%.

Two other money market funds also limit annual losses to 0.23%. One is atl Capital Corto Termo L, which takes the behavior of the Eonia index as a reference and its objective is to maintain the principal and also obtain a return in line with money market rates. The fund will invest directly and indirectly in short-term fixed-income assets and monetary assets denominated in euros, issued by issuers from both the euro area and the rest of the OECD countries and demand deposits. And the other is Edmond de Rothschild Credit Very Short Term D (see chart).

By size, the largest fund in the selection is La Française Trésorerie ISR R, with more than €31.6 billion in assets under management according to Morningstar data. The objective of the fund is to find market opportunities in short-term maturities to generate a return equal to the capitalized Eonia index, with the peculiarity that it invests with environmental, social and governance criteria. Specifically, the fund’s investment process combines an extra-financial analysis and a financial analysis (qualitative and quantitative).

The extra-financial analysis of the environmental, social and governance criteria is carried out by LF Sustainable Investment Research, which has developed its own ESG model, which allows them, at the end of the process, to assign a rating from zero (the minimum) to 10 (the maximum). ) that reflects investment opportunities or, conversely, extra-financial risks. ”

The other largest fund in the selection belongs to the manager of BNP Paribas: BNP Paribas Mois ISR IC , which also invests using ESG criteria and accumulates assets of more than 15.6 billion euros. As explained in its brochure, its investment process is divided into four stages: macroeconomic analysis and market predictions, tactical allocation of assets according to the type of instrument, selection of sectors and issuers, as well as the selection of securities and positioning on the curve. of types. This product is one of the least yielding this year, among those accessible to individuals: 0.27%.

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