Strange days…

Not only Brazil, but several other countries are going through one of the most serious and impacting crises of the last decades. These are strange days that even look like the script of a science fiction series.

The proliferation of the new Coronavirus (Covid-19) has challenged us to live in a quite unpredictable and unusual scenario, whether at home, schools, companies, in social relations and, of course, in the financial market.

As in other crises (September 11th, Sub-Prime, Truckers Strike) that impact the real economy (production and commercialization of goods and services, for example), their impact is much greater than the “up and down of the markets” (investments) and, therefore, as the Leader of Vexty, I inform that we are already taking all possible measures based on the guidelines provided by government agencies.

Regarding the consequences of this crisis on the assets of our Participants and Assisted Parties, I ask for your attention to the following points:

1 – In times like these, our first attitude as professional third party asset managers is: absolute caution. Do not expect Vexty to make any attempt to “operate the market”, i.e., to carry out superficial attempts to guess or anticipate the future at such an unstable and uncertain moment.

2 – As professional managers of third party assets, whose investment horizon is the very long term (focused on social security), we treat a situation like this, based on all the knowledge and techniques available (and already validated) concerning finances, evaluating this moment as a situation of low probability, but likely to occur when the subject is the financial market, i.e., that can (and will) occur sometimes in long periods of investment (a lifetime).

3 – Vexty’s investment management model is built on a solid process framework, starting with the Investment Policy (approved by the Board of Directors on an annual basis), through Manager Selection Standards, specific mandates limiting action on each Asset Class and our Investment and Risk Committee. We also count on external investment and risk consultancies, forming a team that has already gone through all the major crises of the last decades. All this is to prevent individual opinions from influencing the course of the plan’s investments. All this information is available at www.vexty.com.br/investimentos.

4 – Our investment profile model (Target Date Funds) has, in the distribution of asset classes, the most adequate balance between risk and return for each investment horizon. As we have always warned, greater volatility is expected as profiles are further away from their target date, exactly what is happening now. Remember that in Nov/19 we started to offer 11 investment profiles to Vexty Participants and Assistants.

5 – Exactly to protect “the investor from himself”, there is only one period for choosing or changing the investment profile, in November of each year. As we are already seeing, perhaps due to lack of technical knowledge, fear or lack of the necessary patience to recover losses, several “Individual” investors are, in my opinion, prematurely disposing of their investment positions at this moment, which may (and will) cost them a lot in the future, since they will not take advantage of the natural recovery of the market. If our model allowed you to change your profile at any time, I have no doubt that this option would be mistakenly the most used at this time.

6 – Your assets will be reduced in the coming days. And they may reduce significantly in the coming months. This is for sure. I do not know how much they may reduce, but I prefer to prepare you for the bad news that this “has nothing to do” with the ability to manage assets, but with a contingency factor that has impacted economies around the world. As I mentioned earlier, these assets are long-term and the possibility of not being forced to sell our assets “on the down side” will allow us to recover value (and even profit) when this difficult time passes (and it will pass).

7 – The reason why your assets at Vexty, or even outside it, (in case you have other investments “loaded” with Variable Income assets) will reduce is the same reason why they had been increasing before this crisis and also the same reason why they will increase again after it: the returns of the investments are cyclical and the most important is, as always, to keep a long term vision. It is worth noting that, although the causes of this crisis are unprecedented, their impact and magnitude can be imagined: since the beginning of the Real Economic Plan, the market has registered four crises that have caused Bovespa Index to record losses of more than 50% in each of them (Mexican, Asian, September 11th and Sub-Prime crises).

8 – Our technical team (external investment consulting, risk consulting, managers and Vexty’s Investment Board) has been monitoring “market indicators”, indexes, references, asset prices and key information since the beginning of the month in order to identify signs of the end of the crisis (the traditional “bottom of the pit”) in order to take advantage of opportunities that will arise in the recovery process. This will be a tactical and planned move.

But Sergio, what should I do now?

As the person responsible for Vexty and, obviously, a Plan Participant, in which I have most of my assets invested, my suggestions are:

– Do not pay too much attention to short-term profitability, focus on profitability achieved over long periods. This is the ideal measure for long-term investments.

– Enjoy this period and get to know more about the new Investment Opportunities on Vexty’s website. Take the opportunity to learn more about your investment profile and confirm if it is really suitable for your investment horizon. If not, change it in November.

– Browse through all the Investment and Governance content available on Vexty’s website. See that we offer serious and professional work to help you build a after career-oriented fund.

– If you are already in a situation that allows transactions with your assets (rescue or portability, for example) do not make hasty decisions, because perhaps this is not the best time to “realize the loss”. You can count on our support for this or even on a financial consultant of your confidence if you do not have the necessary knowledge on this subject.

– Finally, protect your health against the new Coronavirus (Covid-19). Respect the guidelines provided by the Brazilian State, through the Ministry of Health, but without panic.

I and the whole Vexty team, even if working remotely these days, are at your disposal for more information.

Best regards,

Sergio Brinckmann

Vexty CEO