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Monetary Policy: The Explanation Behind One Cut and Two Pauses

The week draws to a close with attention focused on how markets have reacted to the latest monetary policy decisions: the Federal Reserve (Fed) confirmed a 0.25% cut, while the Bank of England (BoE) and the Bank of Japan (BoJ) kept rates unchanged. As a result, the U.S. dollar edged higher on Thursday after a volatile trading session, the British pound weakened, and the dollar/yen rate dropped more than 0.52% immediately after the decision.

According to the view of international asset managers, Western central banks are currently at a point in the cycle close to the neutral interest rate. “That is, the equilibrium point at which interest rates neither restrict nor stimulate economic activity and may be influenced by various factors, such as productivity growth or demographics,” explains James Bilson, global fixed income strategist at Schroders. Despite the great expertise of monetary institutions, it is very difficult to determine exactly what the neutral rate is. In Bilson’s view, if a central bank believes it has reached neutrality, it is likely to react to new data differently than one that believes it is still in restrictive territory.

The Fed: A Balancing Act

In that pursuit of balance, data continues to serve as a compass for monetary institutions and, of course, for the Fed. According to Jean Boivin, head of BlackRock Investment Institute, the outlook for Fed rate cuts depends on the labor market remaining sufficiently weak, making future policy highly data-dependent. In fact, Powell referred to this as a “risk management” cut, emphasizing the move as a form of insurance against growing signs of labor market weakness.

For Boivin, it is important to take a broader view. “Powell acknowledged that there is no risk-free path for policy and the ongoing tension in his dual mandate to support growth and contain inflation. We see the real tensions elsewhere: keeping inflation in check and managing debt servicing costs. Again, a weak labor market gave the Fed cover to resume rate cuts. That tension between inflation and debt servicing costs could easily reemerge if Fed rate cuts help boost business confidence – and hiring. For now, markets see that tension easing – and the premium investors demand for holding long-term bonds has sharply declined in recent weeks,” he notes.

BoE: Containing Inflation

In the United Kingdom, the Bank of England (BoE) met market and expert expectations by holding interest rates steady, once again at 4%. According to Mahmood Pradhan, director of Global Macroeconomics at the Amundi Investment Institute, although the decision was clear, the monetary institution still faces tough choices on what to do next. “August figures showed that inflation is high and persistent, but growth is patchy, and the Fed appears to be back on a prolonged rate-cutting path. We believe the BoE will need to cut 25 basis points in December, and reducing its balance sheet by £70 billion over the next 12 months is in line with expectations, but the £20 billion reduction in gilt sales should support the bond market,” explains Pradhan.

According to Mark Dowding, BlueBay CIO at RBC BlueBay Asset Management, the BoE governor may want to cut rates if possible, but this will depend on price moderation or a faster cooling in employment data. His outlook is clear: “We continue to believe that stagflation risks are present in the UK, and therefore it will be difficult for the BoE to act. Meanwhile, political risks keep us cautious on the pound. Certainly, if Starmer were to step down suddenly at some point, we think this could lead to significant pressure on UK assets and the currency, due to fears of a more hard-left alternative.”

BoJ: A Hawkish Tone

In Japan’s case, the BoJ kept rates unchanged—a decision also widely expected by the market. However, experts noted the surprisingly hawkish tone, and a rate hike is now being priced in for the October meeting. According to Dowding, it seems plausible that the BoJ wants to wait for greater clarity around Japan’s political leadership following Ishiba’s departure. “If the LDP leadership race results in a ‘business-as-usual’ candidate like Koizumi, this could pave the way for a potential rate hike as early as October – a scenario that could also see the yen strengthen further,” says the RBC BlueBay AM expert.

For Christophe Braun, Director of Equity Investments at Capital Group, the BoJ’s decision underscores its cautious stance amid slowing inflation and global uncertainty, prioritizing stability over premature tightening. “By preserving policy flexibility, the BoJ signals its readiness to respond to external volatility while continuing to assess the strength of Japan’s economic recovery. Unlike the U.S. and Europe, where central banks are leaning toward rate cuts, Japan’s macroeconomic conditions require a more deliberate approach. The BoJ’s strategy supports the early stages of a deflationary cycle, rather than reversing course. We expect the yen to strengthen gradually as interest rate differentials narrow, which will increase Japan’s purchasing power and support domestic demand,” explains Braun.

The SEC Accelerates the Process to List Cryptocurrency ETPs

| By Amaya Uriarte | 0 Comentarios

The U.S. SEC approved new rules that simplify the listing of exchange-traded products (ETPs) based on commodities, including those backed by cryptoassets.

The measure will allow three national securities exchanges to list and trade these instruments under generic standards, eliminating the need for individual agency approval in each case. From now on, if an ETP meets the established requirements, the exchange will only need to publish information on its website within five business days after the start of trading. “This simplified listing process will benefit investors, issuers, other market participants, and the Commission by reducing the time and resources needed to bring new ETPs to market,” the regulator stated in a press release.

According to the SEC, the goal is to facilitate market innovation without compromising investor protection.

In the past, the agency had been criticized for delays and regulatory hurdles, especially regarding ETPs linked to cryptoassets. Until now, exchanges were required to demonstrate that they had surveillance-sharing agreements with regulated markets of significant size, which limited the development of such products.

New Eligibility Criteria

With the approved rules, the underlying commodities of an ETP may be considered eligible if they meet any of the following requirements:

Listed on a market that is a member of the Intermarket Surveillance Group.
Underlie a futures contract with at least six months of trading on a market regulated by the CFTC.
Represented in an ETF that allocates at least 40% of its net asset value to that commodity and is already listed on a national exchange.

In this way, ETPs based on cryptoassets will have a clearer and more direct path to market.

The SEC emphasized that exchanges will still need to file special applications when a product does not meet the generic standards. However, it left the door open for the criteria to be expanded in the future, for example, through objective quantitative standards that would provide more predictability and speed in the approval of new instruments.

U.S. Fiscal Deficit, With No Ceiling in Sight, Despite Tariffs

| By Amaya Uriarte | 0 Comentarios

In August, Tariff Revenues Reached a New Monthly Record in the U.S. of $30 Billion, Rising Nearly 300% Compared to the Same Month Last Year.
However, they were overshadowed by the fiscal deficit figure, which amounted to $345 billion for the month. Analysts consulted by Funds Society agreed that the deficit will continue to grow. It is one of the issues that concerns investors the most.

With one month remaining in the 2025 fiscal year, the year-to-date deficit increased by $76 billion, or 4%, reaching $1.973 trillion. This figure was only surpassed in 2020 and 2021, years of extraordinary federal government spending in response to the coronavirus crisis.

The Congressional Budget Office (CBO) projects that deficits between 2025 and 2034 will total about $21.1 trillion if current tax and spending laws remain essentially unchanged.

The agency stated that the debt-to-GDP ratio would reach 107% during the 2029 fiscal year, surpassing the peak reached in the 1940s, and would continue rising to 156% by 2055. This ratio is projected to be 100% for fiscal year 2025.

Market Consensus: No Swift Deficit Correction Expected

There is market consensus: a rapid correction of the deficit is unlikely. On the contrary, it is expected to remain high in the coming years, partly due to mandatory spending commitments (pensions, healthcare, debt interest), which will continue to increase.

Key Concern

Larry Adam, CIO of Raymond James, indicated a few days ago in a webinar that U.S. debt remains a “key concern” for the markets, especially along the long end of the yield curve.

Although yields remain relatively stable in global comparison, fiscal fears, inflation, and the independence of the Federal Reserve are putting pressure on long-term bonds, he explained.

Despite record debt issuance and price increases driven by tariffs, a sustained rise in Treasury yields is not expected, although episodes of volatility are. The yield curve could continue to steepen if the Fed cuts rates, but the potential for capital appreciation is limited, he added.

Fragile Fiscal Outlook

“While the improvement (in the latest Monthly Treasury Statement) is welcome, it does not change our assessment of the fragile fiscal outlook,” Tomás Villa, Head International Strategist at Argentine firm ConoSur Investments, told Funds Society.

“The level of the deficit is very high and, in fact, the improvement we are seeing benefits from a transition period in which tariff revenues are beginning to be collected, but the loss of fiscal resources associated with the Big Beautiful Bill has not yet been felt,” he added.

Although the latest data show an improvement in the U.S. fiscal balance—annualized to a moderated 6% of GDP—“spending momentum is not easing. Healthcare (including Medicare), Social Security, and interest on the debt, which are the three major spending categories and together represent nearly two-thirds of total outlays, are among the fastest-growing items this year,” Villa explained.

For this reason, ConoSur Investments envisions “a deficit widening again starting next year and remaining elevated, given the current mix of revenues and expenditures.”

Tariffs and Trade

Looking ahead, the Trump administration has reinforced the narrative of using tariffs as a tool for deficit correction, with measures already implemented in strategic sectors such as steel, aluminum, and Chinese consumer goods, noted Felipe Mendoza, financial markets analyst at ATFX LATAM.

However, he believes the trade deficit will likely remain high. “A true correction would only occur if tariffs were accompanied by a strong rebound in domestic production and competitiveness—something that requires time, investment, and complementary industrial policies,” he explained.

Investment Strategy Outlook

In this context, Raymond James believes it is a good time to continue taking advantage of current high rates, especially in investment-grade corporate bonds (BBB or higher), positioning portfolios with individual bonds in an active and strategic manner.

These bonds, the firm believes, offer capital security and a known yield if held to maturity. Although their prices may fluctuate with the market, a personalized portfolio of individual bonds fulfills its purpose: to return the principal within set timeframes and generate income through coupons.

Family Offices Rely on Equities and Alternatives to Face Geopolitical Uncertainty

| By Amaya Uriarte | 0 Comentarios

Family offices equities alternatives — Canva

The report, produced by One Goldman Sachs Family Office, gathered the opinions of a total of 245 decision-makers in family offices around the world on how they are approaching the current complex investment landscape.

“Family offices have shown extraordinary consistency in their investment approach, despite concerns over geopolitical tensions and protectionist trade policies. The 2025 results underscore how long-term orientation and flexibility enable family groups to manage volatility and seize opportunities,” says Meena Flynn, Co-Head of Global Private Wealth Management and Co-Head of One Goldman Sachs, in the report’s conclusions.

Key Findings

The document shows that portfolios remained in line with those of 2023, with slight shifts in allocations to listed equities (rising from 28% to 31%) and a slight decline in alternative assets (from 44% to 42%). Moderate increases in investments in private credit, fixed income, real estate, and private infrastructure partially offset the slight decrease in private equity. When it comes to risks, geopolitics remains the main concern. In fact, 61% of respondents cited geopolitical conflicts as the greatest investment risk, followed by political instability (39%) and economic recession (38%).

As in 2023, geopolitical conflicts remain the most cited investment risk, with 61% of respondents including it among their top three concerns (75% in APAC) and 66% expecting geopolitical risks to increase over the next year. Political instability (39%) and economic recession (38%) follow closely, with global tariffs not far behind (35%). According to the report, most now consider higher tariffs to be the new normal, with 77% expecting increased economic protectionism and 70% anticipating tariff levels to remain stable or rise over the next 12 months. Even so, respondents generally believe that the fundamental drivers of global growth and traditional investment themes remain intact.

Among the conclusions, it stands out that family offices are willing to allocate capital. In this regard, more than one-third of respondents plan to reduce their cash balances (currently at 12%) and invest in risk assets. Notably, most family offices plan to increase their exposure to private equity (39%), followed by equities (38%) and private credit (26%).

Innovation and Thematic Trends

Finally, a key trend is that family offices are becoming more open to investing in technology, especially in AI. “58% expect their portfolios to overweight the sector in the next 12 months. Widespread investments in artificial intelligence (AI): 86% have exposure to AI, largely through listed equities, although many cite concerns about valuation,” the report notes in its conclusions.

In addition to AI, a growing interest in cryptocurrencies has been observed: 33% invest in cryptocurrencies compared to 26% in 2023. A relevant nuance is that the APAC region shows the greatest interest in future investments.

Asset Allocation

Family offices maintain a strong weighting in risk assets, with public equities at 31% and alternatives at 42% (with private equity standing out at 21%). There are slight increases in real estate, infrastructure, and private credit, the latter booming due to its attractive yield. Exposure to hedge funds remains stable, though with greater interest in EMEA and APAC. Looking ahead, they plan to maintain overall stability with selective adjustments: more allocations to private equity (39%), public equities (38%), and private credit (26%), along with a reduction in cash (34%).

On the other hand, innovation is emerging as a central driver. Most are already investing in artificial intelligence, and many are integrating it into their investment processes, with expectations that the technology will gain more weight in portfolios. Interest is also growing in digital assets, especially in Asia-Pacific, as well as in secondary markets due to their increased transparency. Another emerging area is sports, where a growing number of family offices are seeking opportunities related to both teams and media/content.

From Inflation to Employment: The Fed’s New Priority After the Jackson Hole Speech

| By Cecilia Prieto | 0 Comentarios

DPM Finanzas asesoramiento — Photo courtesy

On August 22, we likely witnessed Jerome Powell’s final Jackson Hole appearance as head of the Federal Reserve (Fed). As usual, his speech covered key topics: inflation, the labor market, and economic growth. However, this time there was a special emphasis on something that often goes unnoticed: the importance of distinguishing between cyclical and structural factors when crafting monetary policy. Gradually, the Fed’s focus seems to be shifting. Inflation, which dominated headlines in recent years, is now giving way to the labor market, which—with each new report and revision—is becoming the Fed’s main challenge.

Inflation: No Longer the Main Problem?

After several months of slowing down, some inflation indicators—like the PCE, CPI, and PPI—have started to rise again since April. Even the “prices paid” components in the ISM manufacturing and services indices continue to show expansion. However, looking beyond the short term, there are signs that inflation may be structurally losing strength. For example, housing inflation, which carries significant weight in price indices, continues to decelerate. Additionally, concerns about the impact of tariffs on prices, while visible in some goods categories, appear to be under control for now. Powell noted that, for now, he sees this effect as more temporary than structural. The two major risks that could complicate the outlook—unanchored inflation expectations and persistent wage increases—don’t seem likely given current labor market behavior.

For now, inflation data leading up to the Fed’s next meeting will be key: an uptick could suggest strong demand and the ability to pass costs to consumers, while a downside surprise might indicate consumer weakness and potential job cuts to manage costs. Currently, major indicators and surveys show inflation expectations remain aligned with the long-term 2% target, while the labor market no longer appears as tight as in previous months.

Labor Market: The New Concern?

This is where Powell’s speech becomes especially relevant. The Fed Chair acknowledged that July’s employment data was weaker than expected, and previous months’ figures were significantly revised downward. Although the unemployment rate remains low—around 4.3%—job creation is clearly slowing.

In fact, the August jobs report revealed fewer than 600,000 jobs created so far this year. Excluding 2020, the first eight months of 2025 are shaping up to be one of the worst years for job creation since 2009. Interestingly, this lower labor demand is being offset by reduced supply, partly due to lower immigration, which has helped maintain some balance in the market.

However, Powell warned that risks in the labor market are rising. If it weakens further, it could do so abruptly, with accelerated layoffs and a spike in unemployment. Leading indicators, such as the employment components in the ISM indices, are already showing signs of contraction, prompting markets to anticipate a more accommodative Fed going forward.

What Does This Mean for Monetary Policy?

The Fed estimates that the long-term neutral rate—one that neither stimulates nor restricts the economy—may be around 3%, meaning the current level (4.25%-4.50%) remains restrictive. In the June Summary of Economic Projections (SEP), the median Fed member expected to end 2025 with 3% inflation and 4.5% unemployment, implying a federal funds rate of 3.875%—suggesting two more 0.25% cuts for the rest of the year.

However, since then, several changes have occurred within the Fed’s Board of Governors. Adriana Kugler stepped down, Lisa Cook may lose her seat, and it’s expected that President Trump will appoint a new Fed Chair when Powell’s term ends in May. This could completely reshape the Board’s composition, potentially favoring a more dovish stance. In fact, markets are already pricing in up to six additional rate cuts by December 2026, which would bring the terminal rate to a range of 2.75%-3.00%. This outlook aligns with the views of Christopher Waller, a leading candidate to replace Powell.

Conclusion: Is It for Real This Time?

Although markets have previously had false hopes for rate cuts, this time the context seems different. With a weakening labor market, a Fed that may soon include members more aligned with the president’s views, and inflation that no longer poses a structural threat, the case for rate cuts appears stronger. While temporary spikes in bond yields may occur, the overall direction of the yield curve—especially in the short and intermediate segments—seems to point toward a new rate-cutting cycle.

Opinion article by Sebastian Salamanca, Sebastian Salamanca, CFA, CAIA – Senior Invesment Advisor at Boreal Capital Management

AI: Five Trends Already Impacting the Financial Industry

| By Amaya Uriarte | 0 Comentarios

AI financial industry trends — Photo courtesy

“Artificial Intelligence Is Constantly Evolving, and That Makes It Both a Challenge and an Opportunity” — This statement was made by Elena Alfaro, head of global AI adoption at BBVA, during her presentation titled State of the Art of AI and Use Cases at BBVA, delivered at the first Funds Society Leaders Summit recently held in Madrid.

What Alfaro means is that “AI is constantly evolving, with impact across various sectors; anyone who feels it’s moving incredibly fast is not mistaken—this is a full-blown revolution.” Just one data point proves the case: ChatGPT has been the fastest-adopted technology to date, reaching 100 million users just two months after its launch. Moreover, the expert stated, “ChatGPT is the most successful product in history.”

In fact, Alfaro noted, today, OpenAI (the company that owns ChatGPT) is generating 700 million active users per week, of which around 20 million are paying users. The BBVA representative added that if the user bases of the main competitors in this field are added, there are likely more than 1 billion generative AI users worldwide. Furthermore, considering that AI is part of a technology ecosystem born in the U.S., it has taken only three years to reach 90% of users outside the U.S. (compared to the 23 years it took the internet).

Double-Digit Investment

The BBVA representative also pointed out that the drop in costs has been dramatic since its launch three years ago. This, combined with user interest, has led to spectacular growth in every sense. Reflecting this trend, job openings in the U.S. IT sector related to AI have surged by 448%, while non-AI IT jobs have contracted by 9%.

That said, hyperscalers have doubled down on their AI development investments. Alfaro recalled that the so-called Big Six increased their capex by 63% from 2023 to 2024—a figure that was already high, reaching $212 billion.

Alfaro did not shy away from acknowledging that it’s unclear whether all the major players in this race are generating profits. She cited NVIDIA as the obvious beneficiary—thanks to GPU sales—and Accenture for the success of its AI-related services business line. Additionally, she stated that OpenAI is expected to report revenues of $12 billion by the end of 2025. Even so, the expert explained that major tech firms will continue doubling down on their investments because “they are making a long-term bet on this technology.”

Five Relevant Trends in the Financial Industry

Given that something that happened in April already feels “almost like the Pleistocene” in this fast-moving space, Alfaro outlined five trends that are already impacting the financial industry and that users should understand and familiarize themselves with.

Expansion of Reasoning Capabilities in Language Models
Alfaro explained that we are now dealing with AIs that respond versus AIs that reason—and the final result can differ greatly depending on the task assigned. Reasoning AIs can break down problems through chains of thought, follow logical steps, take time to reason, and flag doubts when needed (she cited GPT-5, Gemini 2.5Pro, and Claude 3.7–4 as examples). On the other hand, non-reasoning bots offer faster responses without verifying or cross-checking information (GPT-4, Gemini 1, Grok 2, Deepseek Base). “This reasoning capability needs to keep advancing because otherwise, automating complex tasks will remain limited,” reflected the BBVA representative.
Multimodality
This refers to the shift from generative AI being text-only to now encompassing images, video, voice, music, or combinations thereof—capable of generating diverse outputs.
Evolution from Assistants to Agents
We are moving from bots that respond to human prompts to AIs that can be given goals and execute them autonomously. Alfaro forecasts that, eventually, each person could have their own “AI Chief of Staff” — capable of coordinating a group of AIs to carry out complex tasks.
Integration of Data and Tools
Currently, ChatGPT typically isn’t connected to internal corporate data sources (like Salesforce, Google Drive, Outlook, etc.), but “there is significant progress in enabling connectivity to integrate company data sources or apps.” She stressed the importance of this integration for task automation and added, “Security and compliance teams will play a fundamental role in this integration.”
Growth of No-Code Tools
“From now on, we’ll be able to do more complex things,” said Alfaro, citing Google Flows, a new tool that helps chain together processes, as an example of what’s coming next.

AI Use Cases at BBVA

Finally, the head of global AI adoption at BBVA shared that the bank is developing a portfolio of various projects across areas such as risk, operations, and software development.

One example is the mobile banking app Futura, which adapts to each user based on their activity and finances—for example, by identifying their most frequent operations and offering shortcuts. It also includes Blue, a chatbot similar to ChatGPT that answers user questions ranging from product inquiries to detailed personal finance queries.

BBVA is also engaged in a highly ambitious project grounded in the philosophy of AI adoption among employees: “This is a people project, not just a technology deployment project. Technology is very important, but it’s people who must adopt it,” she emphasized.

Launched in May last year, the initiative began by making AI capabilities available to a growing number of employees to help boost productivity, encourage creativity, and enable them to build their own assistants. The results, according to Alfaro, have been “extraordinary”: the program has achieved nearly 90% user retention and led to the creation of over 5,000 functional applications by people with no coding experience. Around 1,000 high-value use cases have already been identified and are being implemented, leveraging solutions from OpenAI and Google.

Conclusion: Better In Than Out

In conclusion, Alfaro emphasized that in the face of this revolution, “it’s better to be in than out; staying out doesn’t make much sense.”

She closed her talk on an optimistic note, asserting that humans won’t be left out of the equation. Instead, their role will evolve from task executors to orchestrators—though with important nuances: “We should always analyze tasks from the perspective of what makes sense for AI to do and what makes sense for a human to do.” She cited a study indicating that skills such as organization, prioritization, and training still require strong human involvement. In her view, the most likely outcome is a division of labor, leading to the evolution of current roles and the creation of new ones. “In that evolution, continuous training for all employees is key,” she concluded.

Santander PBI Adds Felipe Herrmann as Senior Investment Advisor

| By Amaya Uriarte | 0 Comentarios

Santander Private Banking International (PBI) appoints Felipe Herrmann as senior investment advisor in Miami, according to his profile on the professional network LinkedIn.

Herrmann held the position of executive director at J.P. Morgan Private Bank in the same Florida city, and previously worked in alternative investment sales and discretionary investment sales at Citi, after serving as associate at Safra Asset Management in New York.

Academically, he holds a bachelor’s degree from USC’s Marshall School of Business and an MBA from Northwestern University – Kellogg School of Management. He also holds FINRA Series 7, 31, and 66 licenses.

BBVA Opens Office in Houston to Grow in CIB and Wealth Management

| By Amaya Uriarte | 0 Comentarios

BBVA Strengthens Its Presence in the United States With a New Office in Houston, Texas, Aimed at Boosting Corporate and Investment Banking (CIB), Global Wealth Management, and Clean Energy Advisory. Located at 1980 Post Oak Boulevard, the hub is composed of nearly 90 professionals and multiple business areas in one of the fastest-growing markets in the country.

The Houston office places BBVA at the heart of the energy transition, leveraging the city’s status as the global energy capital. It operates as a platform for clean energy and cleantech advisory, helping clients design decarbonization strategies, structure clean energy financing, and monetize tax credits. In addition, it works closely with BBVA teams in New York, London, and Madrid.

From September 14 to 19, 2025, BBVA will sponsor the Houston Energy & Climate Week and the Houston Energy & Climate Startup Week, reinforcing its commitment to sustainability.

“Sustainability is a key driver of BBVA’s long-term strategy and growth,” said Javier Rodríguez Soler, Global Head of Sustainability and CIB.

Houston also serves as a strategic base for BBVA’s CIB operations. Texas ranks as the eighth-largest economy in the world and is home to 54 Fortune 500 companies. Houston leads U.S. exports, making it a critical hub for international trade. BBVA bankers specialize in energy, infrastructure, construction, retail, and technology, serving both U.S. multinationals and subsidiaries of foreign companies.

The office strengthens cross-border business with Mexico, supporting U.S. companies in their southward expansion and seizing opportunities in nearshoring. It also serves high-net-worth clients from Mexico through BBVA Global Wealth Advisors, complementing the Miami office inaugurated in 2024.

“Houston combines economic strength, energy leadership, and international connectivity,” said Álvaro Aguilar, Head of Strategic Projects in the United States. “Our expanded presence positions BBVA to offer solutions in sustainability, corporate banking, wealth management, and cross-border business,” he added.

Rising unemployment and falling rates: Can asset securitization shield investment strategies?

| By Romina López | 0 Comentarios

Asset securitization investment strategies — Unsplash

The U.S. labor market is showing clear signs of weakness. In August 2025, the economy generated only 22,000 nonfarm jobs, far below the expected 75,000, pushing the unemployment rate up to 4.3%, the highest level since 2021. This comes on top of the largest historical job revision in decades, with 911,000 positions erased from the statistics between 2024 and 2025.

This cooling of the labor market reinforces expectations that the Federal Reserve (Fed) will accelerate its interest rate cut cycle, with the possibility of further adjustments in the coming months.

For asset managers, this environment combines risks and opportunities, according to FlexFunds. On the one hand, traditional assets—equities and fixed income—may face limited returns and greater volatility. On the other hand, asset securitization is emerging as a key tool to diversify portfolios, improve liquidity, and enhance the distribution of investment strategies across international private banking platforms.

When unemployment rises and the Fed is forced to cut rates to contain recession risks, equity and bond returns tend to carry more systemic risks. In this context, accessing less correlated asset classes becomes a strategic priority.

Securitization allows liquid, illiquid, listed, and alternative assets to be repackaged into investment vehicles and distributed across multiple international private banking platforms. This gives managers access to cash flows different from traditional ones, reducing dependence on immediate macroeconomic performance.

A recurring challenge in times of heightened uncertainty is the need for liquidity without sacrificing diversification. Through structures such as Special Purpose Vehicles (SPVs), developed by FlexFunds, managers can transform illiquid assets into easily transferable and Euroclearable instruments, optimizing both operational and tax efficiency.

This benefit is significant: in an environment where investors demand agile and transparent solutions, securitization provides investment strategies with scalability, strengthens distribution, and facilitates capital raising in international markets.

Historically, rate cuts have increased the price of outstanding bonds, benefiting those who already had duration exposure. However, for new investment flows, a low-rate environment implies limited yields and narrower spreads.

In this scenario, the securitization of alternative assets becomes an effective way to capture attractive spreads without disproportionately increasing exposure to market volatility. Managers can offer vehicles backed by stable cash-generating assets that complement and reinforce the return structure of a multi-asset portfolio.

Competitive advantage of securitization for asset managers

Rising unemployment and the expectation of rate cuts in the U.S. mark a turning point in asset allocation strategies. In this new environment, securitization consolidates itself as a mechanism that provides competitive advantages:

Transforms investment strategies into a vehicle with easy access and international reach.
Expands the client base quickly and efficiently.
Enables portfolio diversification beyond equities and fixed income.
The creation and issuance process is fast and cost-efficient.
Provides liquidity to traditionally illiquid assets (such as real estate).
Enhances capital-raising capabilities.
Adds scalability to investment strategies.
Diversifies funding sources.
Involves low operational costs.
Can be issued on relatively small asset portfolios.

For asset managers, the key will be integrating these vehicles into portfolio architecture not as substitutes but as strategic complements that strengthen the value proposition to increasingly demanding clients in a macroeconomic environment filled with uncertainty.

With FlexFunds, it is possible to design and issue efficient, flexible investment vehicles tailored to each client’s needs. Our solutions are designed for managers seeking to scale their strategies in international capital markets and broaden their investor base.

For more information, please contact our specialists at info@flexfunds.com.

Why Invest in Chile: Legal Certainty, Skilled Workforce, and Potential

| By Amaya Uriarte | 0 Comentarios

Despite the short- and medium-term challenges Chile faces, investors remain confident in the country’s potential. This was clearly reflected in the panel “Why Invest in Chile?” held during Chile Day Madrid, hosted at Casa América in the Spanish capital.

In this expert panel, moderated by Soledad Vial, Editor of Economía y Negocios at El Mercurio, participants discussed both the strengths and the improvements needed for Chile’s economy to take off. Rosario Navarro, President of Sofofa—the trade federation representing Chile’s private business sector—opened the discussion by highlighting the country’s key advantages, particularly a “privileged environment” and strong “geological potential.” She also pointed to the steady reduction of poverty, a notable GDP, and advancing infrastructure.

David Ruiz de Andrés, CEO of Grenergy, stated that the reasons to invest in Chile are clear: the country has a stable renewable energy policy, which he called “fundamental.” He also emphasized Chile’s openness to international investment and its ability to become “a benchmark” and laboratory in sectors such as energy storage. “Chile has copper, lithium, and the best solar resource in the world,” said Ruiz de Andrés, adding that the country “could become a major data exporter.”

Vicente Huertas, General Manager of Indra Group for Peru, Chile, and the Southern Cone, affirmed that Chile continues to be a reference point, particularly in the field of digitalization. He also highlighted the country’s mobility and “excellent communications,” as well as the regulatory stability needed for long-term investments. Meanwhile, Cristián Infante, CEO of Arauco, underscored that “Chile remains attractive,” even as the company expands into new markets such as Brazil.

Challenges to Address

Panelists agreed on the need for Chile to boost economic growth. “The country needs to regain the momentum it had when we first arrived here,” said Ruiz de Andrés, who added that Chile “must believe in the enormous potential it has.” He cited Grenergy’s “Oasis Atacama” project, for which the company has brought 12 international banks into Chile.

The relationship between investors and both local and national governments, as well as with local communities, was another key topic. “I know more ministers in Chile than in Spain,” noted Ruiz de Andrés. Infante highlighted the proactive role local governments play in supporting investment, stating that this creates a “virtuous circle.” Both executives emphasized their companies’ sensitivity to local communities. “It becomes a learning process when there is dialogue with the community, because when they get to know you, they support your activity,” said Infante.

Huertas focused on advances in regulations related to cybersecurity, artificial intelligence, and other technologies “that will help develop these capabilities.” Navarro emphasized the many good practices brought into Chile that “have raised standards” and encouraged demanding high standards in relationships with local communities where projects are developed.

Electoral Outlook

The roundtable also addressed business leaders’ expectations ahead of the country’s upcoming elections. Overall, the panelists expressed little concern. Ruiz de Andrés hopes the outcome marks the beginning of a new cycle in which Chile believes in its own capabilities. Infante would be satisfied if the country stopped seeing “the glass as half empty.” He reminded attendees that Chile “has a solid foundation and all the candidates are aware of the challenges that need to be addressed.”

With Indra operating in Chile for 25 years, Huertas asserted, “We are not afraid of the elections.” He clarified that key issues like cybersecurity and digitalization “are state matters” that go beyond specific administrations and are certain to remain “a growth driver.”

Navarro shared a similar view: “The business world invests long-term and lives through many governments,” she said, adding that there is a clear consensus that Chile must return to growth—“but not at any cost.”

What the New Government Should Prioritize

Panelists also shared what they believe the new government should prioritize. Huertas suggested the need for “territorial integration,” noting a digital divide and calling for modernization of systems. Ruiz de Andrés pointed out a “huge gap” between management training and that of the rest of the workforce, concluding that “we must enable social mobility.”

Infante called on candidates to implement “efficient laws” that allow for project development, arguing that “the way to generate resources is not through higher taxes.” According to Navarro, Chile must improve its competitiveness—in taxes, permitting, labor market regulation, and productivity. She also called for reforms to the education system, stating that “the way we educate isn’t working,” and proposed dual education as a potential solution.