In these two months of 2024, Treasury IPCA accumulates losses; Understand what to do – 03/01/2024 – From Grain to Grain

The beginning of 2024 disappointed investors in Treasury Direct bonds who were excited by the good performance of bonds referenced to the IPCA in the last two months of 2023. In the accumulated period from November to December 2023, the Treasury IPCA+ 2035 bond, preferred by investors , appreciated 6.81%. However, in 2024, the same security will already depreciate by 1.25%. The recent fall makes investors reflect on whether the time is to wait or to get out before it gets worse.

Many who invest in securities referenced to the IPCA, expect that every month their investment will increase in value from the IPCA, plus an interest rate. This is not what is happening at the beginning of the year.

Excluding titles from the Educa+ and Renda+ programs, there are only 6 titles referenced to the IPCA available for sale on the Tesouro Direto platform.

Among these securities, only one, the Treasury IPCA 2029, presents a positive return in 2024.

However, the cumulative return in the first two months of the year for this single security that rises is just 0.34%. Therefore, lower than the IPCA in January alone, which was 0.42%.

Mark-to-market is a machine for grinding the convictions of fixed income investors. Most Brazilians are accustomed to fixed income referenced to the CDI through CDBs that have their prices adjusted by the acquisition rate.

When faced with market-to-market fixed income fluctuations, many cannot bear the anxiety of seeing prices fall or poor performance for more than a month, like what is happening now.

The negative effect on bonds is a consequence of the rise in interest rates on US Treasury bonds. Something similar also occurred between July and October last year, but with greater intensity.

The recommendation is simple: patience. Just like last year, this negative movement tends to reverse itself.

Another important recommendation when investing in fixed income securities is to restrict the maturity of the securities to your investment horizon.

In other words, if you may need the funds in 1 year, you should not invest in bonds with a longer term, as you run the risk of selling with an unfavorable result.

Also, by restricting the maturity to the investment horizon, it becomes easier to be patient, as you are sure that if you hold the security until maturity you will necessarily have the contracted profitability.

Those who cannot tolerate price fluctuations should prioritize investments in securities that have a mark on the acquisition rate, such as CDBs. These bonds, in addition to being guaranteed by the FGC up to R$250 thousand per issuer and CPF, also have the advantage of presenting a return premium that often exceeds the real interest rates on public bonds by 1%.

The Selic rate is on a downward trajectory and should end 2024 at a level of 9% per year or lower. Following this movement, these securities that are suffering today should have already reversed their negative performance. Thus, patience will reward those who manage to control their anxiety about seeing the fixed income portion temporarily devaluing.

Michael Viriato is an investment advisor and founding partner of Investor’s House.

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