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ARGE11, Investo’s Argentine equity ETF, fell 1.92% on Friday, September 25, one of the steepest losses among ETFs traded on B3 that session. The result stood out because the S&P 500 gained 0.51% on the same day and the Ibovespa fell only 0.27%.
Oil was one part of the picture. Reports of talks between the United States and Iran pressured crude and exploration companies; on B3, PETR4 fell 2.58% and PRIO3 lost 2.24%. In the United States, Argentine company YPF’s ADR declined about 2.8%. That move has an outsized effect on ARGE11: YPF was its largest holding, at 20.72% of the portfolio.
Argentine financial assets also came under pressure. Grupo Financiero Galicia’s ADR fell 2.15% and Pampa Energía’s declined 1.08%. Weakness thus reached energy and financial stocks, two important areas of the fund. Argentina’s local session was negative as well: the S&P Merval index fell about 1.6% in pesos.
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ARGE11 (Investo): down 1.92%
ARGE11 tracks the MarketVector US Listed Argentina Index, a basket of 15 US-listed Argentine stocks. Its disclosed holdings include YPF at 20.72%, Grupo Financiero Galicia and Ternium at 14.37% each, Pampa Energía at 11.96% and Banco Macro at 7.43%. The first four positions alone accounted for 61.42% of the index.
The ETF was down 4.52% for the week. For Brazilian investors, the exposure combines at least three risks that should be considered together:
- The performance of Argentine companies;
- YPF’s sensitivity to oil prices; and
- The conversion of dollar-denominated assets into reais.
On Friday, the commercial dollar fell 0.23%, which also worked against the return in reais of an international portfolio without an equivalent currency hedge.
While ARGE11 lost 1.92%, BlackRock’s IVVB11, linked to the S&P 500, gained 0.41%, and Investo’s global equity ETF WRLD11 rose 0.43%.
