Credicorp Capital: tension between Russia and Ukraine would not seriously affect local mutual funds

The recent geopolitical tension between Russia and Ukraine would have a minor impact on the mutual fund industry in our market, Rocío Coloma, General Manager of Credicorp Capital SAF.

Columbus explained that Peru has a 58% concentration in conservative fundswhich are more focused on Latin America, the United States and our own country, and despite the fact that the trend during the last stretch of 2021 reflects a greater preference towards the European market, it is unlikely that volatility will weigh down these funds.

It is worth detailing the Fund of Funds Credicorp Acciones Europa FMIV led the industry, with 29.48% (see table).

“Probably the (mutual funds) destined for European countries would be 3 to 4% at most, and the investment of these European funds has just begun since the middle of last year and they are variable income funds with an investment horizon of 4 to 5 years, so they will not collect this impact, “he explained.

However, Coloma pointed out that One problem would be that clients begin to “redeem” their funds at this juncture, even knowing that their investment horizon is longer. “There are clients who have resources in funds with a horizon of one, two or three years, but due to events of this type they get scared and decide to leave, this is the worst thing they could do. There, losses would be suffered due to the volatility of the situation, ”he noted.

“They are strategic positions of some investors a little more sophisticated – in relation to European funds – but it is not something relevant”, he summarized.

How are mutual funds coming so far in 2022?

From Credicorp Capital they underline that the conflict between Russia and Ukraine, as well as the rise in rates by the United States Federal Reserve have reduced the profitability of the funds during January, although, they assure that an improvement has been seen towards the second half of February despite the volatility due to the geopolitical tension carried out by the Kremlin. “However, this led to a rise in the prices of commodities and raw materials, especially favoring the Latin American markets,” they summarize.

Coloma assured that they await a diplomatic solution as the member countries of the G7 (Germany, Canada, the United States, France, Italy, Japan and the United Kingdom), intensify their sanctions against Russia, for which he reiterated that February closes marked by volatility but recommended “not to panic” as uncertainty levels off.

While in the Peruvian panorama, they assure that political instability will be a constant, for which they will continue to opt for funds of funds of international variable income.