The month of March was marked by a series of events that could have had a very negative impact on the financial markets. The reality is that, after allthe performance was positiveaccompanied by the enormous volatility that characterized the month.
Turmoil in the financial sector
O financial sector was in evidence in the month ended. The fall of three banks in the US, with emphasis on the Silicon Valley Bank (SVB), put this sector in the center of concern for economic agents and investors. The rapid way in which the SVB problem spread to two other institutions forced official entities to taking a firm and robust position. The banks were not saved, but the American State guaranteed the safeguard of all the deposits that were under the purview of these three institutions. prevent an escalation in tension and fear around a sector that “lives” on trust. The fear that we could be in the presence of an episode similar to 2008 generated a lot of apprehension and some moments of tension. It is important to emphasize that the genesis of the fall of these banks had nothing to do with the problem that occurred in 2008. To complement the risk surrounding the banking sector, in Europe, we had the “fall” of the giant Credit Suisse, which did not withstand years of poor management policies and lack of internal control procedures. Once again, the competent authorities (Swiss National Bank and government) acted quickly, creating a plan in record time that, phase, allowed the bank to have access to immediate liquidity. The second part of the plan consisted of selling Credit Suisse to UBS. You big hitters were the bondholders who held convertible debt, and who in one weekend saw their bonds lose all their value. This “merger” was the way found by the Swiss authorities to calm the markets and restore confidence in a fundamental sector for the country’s economy. All these cases throughout the month of March raised doubts and fears among investors that have not yet been completely dispelled.Read more: Silicon Valley Bank – The explanation
central banks
The month is still marked by the widespread rise in interest rates by most central banks. Despite the scenario of greater turbulence that the banking sector went through, the central banks stayed true to their plan, with an active policy aimed at bringing inflation back to bearable levels. On a positive note for financial markets, after several rate hikes, some central banks showed signs of being close to the end of the cycle of increases. Investors’ expectations that we could actually be close to the end of this aggressive monetary policy was reinforced with some inflation data that show some easing. Complementarily, the outbreaks of instability that have arisen in the world economy “force” monetary entities to take additional precaution with regard to the influence they may have on the real economy, which is currently experiencing high interest/financing rates. These two factors, together, were responsible for having a positive performance in March, even taking into account all the turbulence that occurred.Read more: ECB fulfills its promise and raises interest rates again
investment portfolios
As previously mentioned, the month was positive. O bond segment appreciated, benefiting from the fear surrounding the banking sector, which caused many investors to take refuge in more liquid assets. O shareholder segment also performed wellwith emphasis on the technology sector, which will be the most benefited at the end of a cycle of increases or even a reversal of monetary policy. The dollar depreciated against the euro, eventually penalizing some positions that are invested in the American currency. the moderate portfolio appreciated by 1.69% and the dynamic portfolio by 1.39%.Finally, it should be noted that these performances are not justified by factors associated with the real economy, but rather by expectations regarding the actions of central banks. As such, prudence should always prevail, at a time when inflation remains at very high levels, interest rates are high, indebtedness is at maximum levels and there are fears surrounding some key sectors in the different world economies.Read more : How the banking crisis can help control inflation and curb interest rates
Portfolio performance with moderate profile
Portfolio composition with moderate profile
Portfolio performance with dynamic profile
Portfolio composition with dynamic profile
Purpose of our portfolios
When, in March 2021, we created these two virtual wallets, our objective was always to knowing how to explain market movements and the influence they had on our portfolios. We have always had this concern, not least because investment is a process that extends over time. As an example, in May 2021, we reduced risk in portfolios as we understand that the performance of financial markets did not have a logical or rational justification. It took some time, but the reality is that our current positioning, despite presenting a negative performance, is better than the initial portfolio. volatility. the fundamental is to understand where we are invested and why. Realizing that in the midst of panic there are always opportunities, and having the rationality to distinguish and find quality assets. Because these, when everything calms down, will recover and generate returns…note: The Doctor Finance portfolios are not and should not be understood as advice to invest in this or that type of financial instrument. Our portfolios were created only to illustrate the potential risks and benefits of investing, directly or indirectly, in financial instruments such as stocks and bonds. The information contained in the article is not binding and does not invalidate the full reading of documents that support the matter in question.
A professional writer by day, a tech-nerd by night, with a love for all things money.