With the approval in Congress for the withdrawal of 100% of the Compensation for Time of Service (CTS) and the disbursement of funds from the AFPs up to S/ 18,400 (4 UIT), many Peruvians will be able to alleviate their economic situation, while others will invest that money. Against this background, there are several alternatives to make profitable. Here we tell you all the details.
According to Renta 4 Stockbroker Society, in case they decide to withdraw the money, it is responsible to allocate what is not needed to be spent in the immediate future due to emergencies to investment alternativesthis to be able to concentrate capital that works as a long-term fund.
Among the recommended investment alternatives, the following stand out:
american stock market
The company indicates that the S&P500 Index has fallen 12.99% to date, falling 3.56% on the day, while the Nasdaq is down 21.27% on the year and 4.99% on the day.
However, in the last five years, the S&P500 has risen 55% and the Nasdaq has risen 79%. “So, even though a rate hike scenario is negative in the short term, we see that in the long term the markets tend to recover and return much better returns than local options.”, he mentioned.
He added that this climate of rate hikes ultimately ends up hitting the price of the bonds to a greater extent, given that the new ones have to adjust to the reference rates of the current central banks, which has an impact on the price of the bonds in the market.
Renta4 SAB maintained that among the hardest hit sectors are consumer discretionary and technology, which will largely have to restructure their businesses based on this climate of rising rates, in the short term their profitability could continue to suffer, but in the long term In the term, it is projected that, if the US economy manages to withstand rate hikes, these items would benefit the most.
The market is estimating an upside of 29.3% in consumer discretionary and 26.2% in the technology sector for the next 12 months, while the upside of the S&P500 is at 20%.
ETF’s
Given that the impact of rate hikes is different for each sector, the broker pointed out that it is not recommended to bet on shares in particular, so the ideal would be to go for a strategy based on ETF’s.
“These are exchange-traded mutual funds that accumulate a series of assets and follow the weighted return of these. In consumer discretionary, if the market is right with the returns, we would see the main consumer discretionary ETF XLY grow by around 29%, while in the technological case the XLK would grow by around 26%.“, accurate.
to be careful
However, Renta 4 Sociedad Agent de Bolsa indicated that, in the future, people between 30 and 40 years old who have already begun to dispose of their AFP funds would not have the security of getting a formal job with which they can contribute 10 % of your gross salary for your retirement.
He considered that in the long term this will generate a greater fiscal burden, given that the State will have to cover the fund of people who have been left without a pension.
He added that this impact is added to similar measures that began to be carried out as of 2020. In total, it is observed that the total withdrawals have accumulated S/ 66,000 million of the Private Pension System (SPP).
“The movement will start with the AFPs closing positions in their main holdings, such as local sovereign bonds. Holdings in this category are equivalent to 15% of the total and could be reduced to 13.64% given that the AFPs would have to liquidate positions to adjust to outflows, thus generating a decapitalization of the funds”, commented Sebastián Documet, General Manager of Renta4 SAB.
