Structure, not forecasts

2021 was a good year for investments globally and particularly for the Chilean investor who had dollar exposure. As the year closed, there were certain consensuses that seemed obvious to anyone wanting to structure a portfolio. Let's review the most common ones and their performance so far in 2022.

First, maintaining high exposure to dollar investments. After a sharp rise from 711 to 844, the dollar in Chile “could only go up.” Today the exchange rate stands at 790, having fallen more than 6% in the first quarter.

On the other hand, technology stocks, which lead global innovation and have nearly doubled the S&P 500's return over the past 10 years, looked like another safe bet. In the context of geopolitical crisis, these investments have fallen more than 10% in dollars, 6% more than the U.S. market as a whole.

Locally, stocks and bonds lacked appeal. Fixed income was coming off one of its worst years in history and the outlook for the IPSA was very poor. Today the AFP's Fund E has accumulated a return of more than 4% and the IPSA has almost reached a 14% gain for the year. All of this in a context of rising rates and global crisis.

2022 has undoubtedly been atypical; moreover, we've only just finished the first quarter and there's a lot of cloth left to cut. However, it illustrates a very important point. Forecasts fail, trends reverse. A portfolio should focus on the structure that makes sense with long-term objectives. In the short term, the risk of being wrong is very high.

This column was originally published in the newspaper La Segunda on March 31, 2022 [LINK]