World markets experienced increased volatility during the month of February, with the invasion of Ukraine, the accelerated increase in commodity prices and the increase in global sanctions against Russia being the main causes. This added to more persistent inflationary pressures and uncertainty regarding the pace of rate hikes by the Federal Reserve and other central banks, concerns that have been present since the end of 2021. Safe-haven assets such as gold, the dollar and U.S. Treasury bonds were favored by this situation during the month.  

Nevertheless, market declines due to geopolitical events have historically been short-lived. In the 6 and 12 months following such events, average returns have been in the order of 5% and 9%, respectively. Actions precipitated by volatility episodes can lead to negative impacts on portfolio performance.

Grupo Inversión decided to keep its exposure to equities, maintaining the defensive approach it took at the beginning of the year; during the month of January, exposure to the technology sector was considerably reduced and participation in sectors less affected and even favored by rising interest rates (e.g. financials) was increased. In addition, exposure to equities protects investors' purchasing power in inflationary periods such as the current one. With respect to Fixed Income, we maintained short durations and floating rates, which compares positively with the debt index universe.

While the start of the year has been volatile and difficult for investors to navigate, it is important to take into account positive factors that have taken a back seat in recent times:

• Strong quarterly reports during 4Q 2021, with earnings and sales growing 31.4% and 16.1% quarter-over-quarter, respectively; as well as expected earnings and sales for 2022 of 8.6% and 8.4%, respectively.
• Robust U.S. labor market, creating 678,000 new jobs during the month of February, bringing the unemployment rate to 3.8% and expected GDP growth for 2022 of ~3.5%.
• Significant declines in new COVID-19 cases and deaths, leading economies to lift restrictions and adopt greater mobility.