Rafael Peña and Hernán Cortés are short on government bonds and long on emerging market debt, they have gold but have exited Asian stocks.

Rafael Peña and Hernán Cortés are short on government bonds and long on emerging market debt, they have gold but have exited Asian stocks.

Rafael Peña and Hernán Cortés are short on government bonds and long on emerging market debt, they have gold but have exited Asian stocks.

Rafael Peña and Hernán Cortés, managers of Olea Neutral and co-founders of Olea Gestión.

Called Rafael Pena and Hernan Cortes, and manage Neutral Wavethe investment fund that reigns in practically all market scenarios as it is a moderate tint multi-active, an all-rounder. This little hidden gem deep in the closet could well have multiplied its assets tenfold if it were an international fund, but the reality is that they are still going for 130 million euros when adding the different variants of the same strategy.

“If we were called Smith and Johnson, we would have 400 million in the worst case or, surely, more than 1,000”. It is a wake-up call for ‘brand Spain’.

Before in Tressis and from Olea Gestión two years ago, the independent manager that they set up to put themselves on their own, these managers have given a 6% annualized return since the strategy started. Neutral Wave rises more than 11.5% so far this year and has raised more than 15 million new money.

“The multi-asset fund, understood as an evolution of the mixed ones, is gaining a lot of weight in the portfolios and it makes perfect sense. The monetary lose attractiveness with rates between zero and negative and, in addition, They are in a very dangerous moment.” warns Peña in an interview with EL ESPAÑOL-Invertia.

The leitmotiv of these two managers is to develop a “joint risk management” whose result is “Very interesting returns in very turbulent times.” If we were to make a comparison with the world of fashion, its fund would be “the intermediate size of Zara”, and its objective is for customers to trust between 15% and 20% of a typical portfolio to its product.

To illustrate how methodical their risk-return management is, just draw a timeline from the 2008 crisis to the Covid-19 crisis. At that time, they had no bank shares in their portfolio. Then they rose in public debt, later they entered mortgage securitizations and, immediately afterwards, they made a double movement of buying autonomous community bonds and subordinated bank bonds. Just before Covid, they set foot in bank stocks again.

Adding fixed income and equities, banks and financials are the main sector with a third of the exposure.

Gold, yes; Asian, not

But, how do you see the market at this point of post-Covid reactivation? One of its great bets are the bonds from emerging markets such as Mexico, Brazil, India, Russia or Turkey, that pay higher coupons than the developed ones. They also have a prominent presence of raw materials (6%), to lower the risk of an ultra-expansive monetary policy that could come to an end sooner rather than later.

Regarding this last situation, “we believe that gold is a better counterweight to monetary policy than cryptocurrencies”, going against the current of the new cryptoactive gurus.

In line with this idea, they are short 11% government bonds, those who could suffer the most with future interest rate hikes. “Our business is to buy well-paying maturity bonds, not play more rate cuts to make money,” in defense of their emerging positions and against those who buy the German Bund as a haven asset.

Euro coins.

Euro coins.

Peña’s forecast is that “at least for the remainder of the year and during the first half of 2022, inflation is going to be above the objectives of the central banks, and we do not rule out that these levels are more structural than expected.” what does it look like”. Between persistently high inflation and possible rises in interest rates, “we are seeing gray rhinos”, which is when you see the dangers coming little by little but, nevertheless, you do nothing to avoid them. Market complacency.

His latest turn to protect customers has been off the 3.5% position they had in South East Asian stocks, they have left zero. “We think right now Asia is a hot place.” in the midst of a crisis of confidence around China due to the Evergrande case. “We see in China parallels with the last great Spanish crisis, but with more implications. The construction and infrastructure sector weighs 28% of GDP, similar to what happened to us in the crisis”.

When will they return to Asian stocks, the fastest growing region in the world? “If there is a simple absorption of the Chinese real estate crisis, it would be a great incentive”, lay the foundations from Olea Management.


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