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BTG Pactual: “The change in rates forced the Chilean investor to rearrange his portfolio”
Friday, April 19, 2024 - 08:30
Crédito foto BTG Pactual

The investment bank has seen the reorganization of local portfolios since the country's central bank set its reference rate at 6.5% in the beginning of April.

In line with monetary policy decisions and lower interest rates, Chilean investors are already leaving behind term deposits and searching new instruments, mainly funds of all types.

“We have seen an outflow of term deposits, compared to last year. The last two years, when rates were high, everyone turned to term deposits. We are seeing a movement towards investments of all kinds now, including stocks and business funds," José Antonio Rollán, Co-head of the digital investments area at BTG Pactual, tells AméricaEconomía.

The bank is now interested in diversifying fixed-term instruments for investors from this South American country.

“Basically, the change in rates forced the investor to rebuild its portfolio because with term deposit rates at 12% per year, investing there was a no-brainer,” the executive tells AméricaEconomía.

But now that the central bank is on a path to relax monetary policy after the most recent reduction left the reference rate at 6.5% in early April, the investment bank has seen the restructuring of local investors' portfolios.

Rebuilding a portfolio is more difficult than choosing a term deposit, because making a good selection becomes important there.

“There are asset classes that are better looking than others and, in general, our strategic team here is very convinced of local equities. We believe that there is room to grow, but the recommendation as always is to put together a portfolio that is balanced according to your risk profile, not to be so tactical in decisions, but to say, my risk profile is this, I am going to put together a portfolio 60-40, 80-20,” says Rollán.

All in all, BTG Pactual considers that this trend will change the balance of institutions a little because those that did not have term deposits saw a lot of capital outflow and without instruments to take advantage of said trend, banks and AGFs ( management fund administrators) will be challenged to capture those deposits back.

“Before, term deposits took away that decision because the only variable, in the end, was the term. Not now. You must build a portfolio, balance how much will be variable income and how much will be fixed income, if the instrument is local or international, and what will be exposure (…) There is no doubt that a term deposit is more complex,” adds the executive.

It is a flow that the market is observing mostly towards funds and equities, but also to a lesser extent towards offshorization, that is, looking for foreign instruments.

This was a trend marked in Chile with the social outbreak and, although it is not seen today in a marked way, at least in the segment that BTG Pactual serves (mass affluent), it continues the trend of at least questioning the level of local exposure.

Does that make Chile less attractive to invest in?

It depends, because the international investor self-perceives agnostic: “if an investor sees good numbers, he is going to invest in Chile (…). The Chilean stock market continues to trade below its historical valuation levels, so I believe that there are several local investors who are seeing Chile with good eyes, but they are much more pragmatic,” says Rollán.

BTG Pactual also highlights that Chile's monetary and fiscal policies have gone hand in hand.

“The Central Bank has lowered the rate faster than the rest of the central banks of advanced and emerging economies. But, this occurs in a context where inflation is currently at 3.2%, well below the 14% we saw in mid-2022, and inflation expectations are anchored at 3%. So, we can say – in a very general way – that a good part of the focal work has been done and rates as high as those we saw in 2022-23 are not justified. Currently the MPR is at 6.5% and it is likely that we will see more gradual cuts, or even pauses, depending on the evolution of inflation,” Pablo Cruz, chief economist at BTG Pactual Chile, told AméricaEconomía.


The BTG Pactual executive's analysis occurred during the launching of the Brazilian investment bank's new digital investment platform.

The platform is designed to inform and simplify the journey of anyone who wants to actively invest, whether with a robo-advisor, independently or with the support of an advisor from the firm.

The BTG Pactual app offers access to a wide range of financial products and services, from local stocks and term deposits to funds managed by renowned managers both in Chile and internationally, with more than 300 products available for clients to create portfolios adapted to the investor's needs.

“Our plans for this year are to deepen our offering, both in products and features. And, in that sense, we want to continue advancing in an open architecture scheme to reach more funds from more administrators. We want to become a one-stop-shop for investment instruments and continue adding new investment regimes, eventually APVs and legal entities to have an increasingly robust offer,” concludes José Antonio Rollán.



Gwendolyn Ledger