Five Reasons Explaining Why the Dollar Is Losing Ground Against Emerging Markets

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Carlos Carranza, Senior Fund Manager at M&G Investments for local markets and Latin American sovereign debt, warned that the dollar is facing a process of structural diversification that could mark the end of 15 years of US exceptionalism. He also noted that flows into emerging market debt remained positive even during the onset of the war between Russia and Ukraine, contrary to all historical patterns.

“Since the war began, we have had net inflows into emerging market fixed income debt. That, to me, is quite surprising because historically, five, ten, or fifteen years ago, if you had a spike in volatility like the one we are experiencing now, you would normally see outflows from that asset class,” Carranza said during a presentation at the Leaders Summit, a professional event in Miami organized by Funds Society.

The manager—who has more than 21 years of experience in the industry and a track record at JP Morgan, Allianz Global Investors, and currently at M&G since October 2025—structured his analysis around two pillars: the factors weakening the dollar and the strengths of emerging markets themselves.

The dollar under pressure: five reasons

The first factor Carranza identified is the change in leadership at the US Federal Reserve (Fed). Jerome Powell, who led the institution for eight years through crises, high inflation, and periods of stability, will step down on May 15, handing over to Kevin Warsh. “We are moving from someone we know, who has led the Fed for eight years through multiple crises, to someone new as chairman. That simply adds more uncertainty,” he noted.

The second factor is the US midterm elections. Carranza presented a slide with data from the past 20 years showing that the party in power lost the midterms in every case, regardless of political affiliation. Since World War II, that pattern has repeated 90% of the time. For international investors, he noted, this may translate into greater institutional uncertainty and less coordination between the Executive and Congress.

The third reason is fiscal dynamics. US public debt as a share of GDP has risen from approximately 70% two decades ago to 122% כיום, with a deficit running at 6% of GDP. For this year, estimates point to net issuance of $2 trillion in Treasury bonds. Faced with that supply, Carranza outlined the logic of some investors: “Why not buy emerging market bonds instead of Treasuries? Why not buy Chile, a solid investment-grade credit yielding 200 basis points more and not issuing debt this year?”

The fourth factor is the geopolitical environment. Carranza listed a series of ongoing tensions: the debate over the Panama Canal, the conflict in Ukraine, negotiations over the USMCA—whose review will begin in the coming weeks—the conflict with Iran, and tariff volatility. On February 20, the US Supreme Court ruled that President Donald Trump cannot impose tariffs unilaterally. “There is a lot of research showing that perhaps new marginal savings in Europe are no longer being allocated 100% to US equities, as used to be the case,” he said.

The fifth element is the trend reversal in emerging market currencies. According to the index presented by Carranza, emerging market currencies appreciated against the dollar in 2024 for the first time after fifteen consecutive years of weakening, a period that began around 2010. “It could be the beginning of a reversal of fifteen years of US exceptionalism. Or not. But it could be,” he said.

Emerging markets with stronger fundamentals

In the second pillar of his analysis, Carranza contrasted the fiscal position of emerging markets with that of developed economies. While US debt-to-GDP has nearly doubled over two decades, the average across about 20 large emerging countries has increased by only 18 percentage points over the same period.

Another argument in favor of emerging markets is the discipline of their central banks. Brazil raised interest rates by 1,000 basis points before the Fed made its first 25-basis-point hike in the post-COVID cycle. Colombia surprised with a 100-basis-point increase just a few weeks ago. Chile adopted a restrictive stance following recent global events, and countries in Central and Eastern Europe are already anticipating hikes due to concerns about inflationary pressures. “The repricing and the speed at which emerging market central banks have reacted have been enormous and very fast,” Carranza said.

As a result of that discipline, average real rates in emerging markets stand at around 2.5%, providing room to maneuver in the face of a potential new round of inflationary risks stemming from oil prices.

Underpositioning and flow potential

Carranza also challenged the perception that investors are already overloaded with emerging market assets following last year’s strong performance. International holdings of local sovereign debt in emerging markets stand at around 16%, below the 23% level seen before the COVID-19 pandemic, according to central bank data.

The M&G manager concluded with a figure illustrating flow potential: the US pension fund industry manages around $6 trillion and allocates only 5% to non-US assets. An increase of just one percentage point would amount to $60 billion in inflows into emerging markets. “A fund in Minnesota, if it shifts 1%, implies hundreds of millions of dollars for a very under-owned asset,” he illustrated.

Rick Rieder (BlackRock): “We Are in an Environment of Earning the Coupon, Capturing Carry, and Sleeping Soundly”

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Rick Rieder, Global CIO of Fixed Income at BlackRock, is one of the most respected and influential voices in the global asset management industry. Known for being a “data maniac,” as he himself admits, he oversees approximately $2.4 trillion (trillions in Anglo-Saxon nomenclature) for the firm, in addition to serving on Alphabet’s advisory board and UBS’s investment committee. His name was even mentioned as a possible candidate to head the Fed—at least, it was an option that appealed to the markets.

During his participation in BlackRock’s annual event for Latin American and US offshore investors in Miami, Rieder speaks with us. The room is spacious, a pleasant spring warmth filters through the windows, and his deep voice fills the space with comfort. The way he gestures with his hands reveals that Rieder is a methodical man; for that reason, we begin our interview by asking him about his working method.

How do you manage to isolate yourself from noise to do your work?

From my perspective, I am absolutely obsessed with data. I study it very intensely. I think there is too much focus on anecdotal information that is not very relevant, and it often creates inertia of biased information. I read a huge number of corporate earnings reports, which tell me what companies are doing with their inventories, why they are hiring staff, or what they are doing with capex. For me, that is the best source of information. I learn a great deal. In fact, I experience it like a game, like a treasure hunt: you read a report and look for clues. I also have monthly calls with clients, which I’ve been doing for 30 years, and I have my own process that involves reviewing about 1,000 charts and tables. Literally, I lock myself away to analyze them two days a month. All of that helps me piece together the puzzle, and I cannot do it without studying the data. Even though I have a great team that helps, I need to process it myself. Then I integrate all that information and build a view that is not always correct, but I need to go through that process.

As a result of that analysis, what differences have you identified between narratives and information?

We are seeing something we have never seen in this generation: an economy that works very well, but only with two engines. On the one hand, there is massive investment in technology, AI, and data centers, which is sustaining the economy and tech equity markets. On the other hand, there is a high-income cohort that is doing very well, even benefiting from high rates because they are net savers. The top 10% accounts for 23% of consumption, while the bottom 40% accounts for 22%. That is a huge distortion. Therefore, when you look at the economy as a whole, it appears strong—you can have nominal GDP growth of 5.5% or even 6%—but it is only functioning well on two fronts. The majority of the population is struggling, and that is why I have been quite clear regarding interest rates: they mainly affect those in a worse situation.

From all the information on corporate earnings, what relevant conclusions have you reached?

From bank earnings, I would highlight that M&A activity is real. It is clearly visible in the results: companies are becoming more strategic, making acquisitions to reduce costs and grow. Trading activity, especially in equities, has been very high, which makes sense in a volatile environment. Another point that I think has been greatly exaggerated is concern about private credit. During this earnings season, there was talk of stress, but I think it is often overstated by anecdotal stories. When you look at the results of major banks, the “mark-to-market” stress appears less severe than some interpretations suggest. As for technology, I am impressed by the figures. The market is pricing in explosive growth in the short term, but with caution in the medium term, because there could be technological changes that reduce demand. Personally, I think the market is being too conservative: demand has more runway than is being priced in.

Returning to your reflection on the distortion in economic growth, do you think there is an employment problem?

There is no job growth. In fact, excluding healthcare, we have lost 378,000 jobs over the past 10 months, which is surprising given an economy growing at that pace. We have an employment problem. From the outside, it seems the Fed does not need to do anything, but the reality is that the economy is not working well for most people. And we still have to see the real impact of artificial intelligence (AI), which has not yet arrived. It remains to be seen how all that technological efficiency will translate in companies that are already more efficient even before AI has its full impact. We have not yet seen that impact, and we already have no job growth. Some say it is not concerning because labor supply is lower due to immigration, but it is still a problem: there are not enough job openings.

We have read your analysis on the “weakness of the labor market” for young people. Is it a trend? Is it related to AI?

I think it is a disaster. The unemployment rate among college graduates is the highest in a generation, and youth unemployment (ages 16–24) is increasing. There are several factors: on the one hand, people over 55 are staying in the labor market longer, reducing vacancies, and on the other, we have the impact of technology and AI. I think it is a serious problem for young people and low-income groups. And it is ironic: older people, with higher incomes, benefit from high rates because they are savers, while young people are the ones with debt.

Let’s move to economic policy. What should we expect from the Fed? And regarding the deficit and interest rates?

I mean, first of all, the United States has too much debt, and almost all of it is in the short end of the yield curve. We rely on Treasury bills, and I think no company would manage its business like that. We need to reduce debt; otherwise, the dollar will remain under pressure. There are only two ways to do that: cut spending—which will not happen soon—or grow faster than the debt. This leads me to believe that the reason the Fed will cut interest rates is that a large portion of the country’s financing is short-term. They will have to wait a bit because of the impact of oil, but even so, I think they can make two cuts this year. If it were up to me, I would cut rates right now, regardless of oil or the potential impact on food. The longer we keep rates high, the more we worsen the debt problem.

As for the neutral rate that the market currently estimates, I do not think it is correct. I believe it is considerably lower than what is assumed, for two reasons: first, productivity is helping to reduce inflation, and second, the interest rate tool no longer regulates investment (capex) as it once did. Therefore, interest rates no longer significantly influence business investment, which is a huge difference compared to the past. In reality, rates mainly affect the housing market, low-income groups, and small businesses, which are the ones suffering the most. How could that not indicate that current rates are too restrictive? Moreover, they are not significantly reducing inflation. Therefore, I think they are restrictive precisely in the areas where it matters most.

That said, I have learned in my career that you must invest not based on what I would do, but on what they are going to do. It took me 20 years to understand that. I always thought: “this is a good idea, they will do it.” But the only thing that matters is what they will actually do. And I do not think they will cut rates now. I think they will wait one more meeting, analyze the data, unemployment will rise a bit, and then they will cut rates.

In this context of monetary policy, how do you interpret inflation?

There is a big difference between demand-driven inflation and supply-driven inflation. I think it is unfair to say we have an oil shock. I think we are facing a supply shock, and that shock, by itself, will already slow the economy. We do not need higher rates to curb it, as that will reduce consumption, especially among lower-income households. Today we are at core inflation close to 3%, and we believe it will fall to 2.5% by the end of the year. The Fed’s target is 2%, but that does not mean we need to get there next month. As long as it stays around 3% due to the oil shock, it will already have its effect.

Are you still very convinced about the rise of the fixed income cycle? Are we already there or has something changed?

We are in a golden age of fixed income. In five years, we will look back and say: my goodness, we could build portfolios with very attractive returns. Real rates are spectacular. You can build a portfolio with a yield of 6% or 6.25%. If inflation is at 3%, that is a very attractive real return. If you look at the 20 years prior to COVID, we had negative rates in Europe and Japan, and close to zero in the US. Now you can get 6% or more, and not with low-quality assets: you can use agency mortgages, AAA CLOs, AAA assets. When I say it is a golden age of fixed income, it is not because I think we will make a lot of money from rate cuts; it is more an environment of earning the coupon, capturing carry, and sleeping soundly. I think the Fed will act cautiously and that long-term rates will not fall too much.

Do you see value in the widening of corporate credit spreads?

I think public credit markets are simply fine; they are not exceptional. Securitized markets and emerging markets are more attractive in relative terms. I like places like Mexico and parts of Brazil, especially if you are willing to take currency risk—and I think you can, because I do not expect significant dollar appreciation. That is why emerging markets are more attractive than credit today. Securitized assets as well, since you can structure them yourself with better collateral. Securitization markets are in very good shape: commercial real estate, residential, asset-backed securities.

You mentioned emerging debt. In this case, the issue is the dollar, but do you like the Mexican peso?

I like the yield that Mexico offers. I do not have a strong view on the peso, but I do think the dollar will not appreciate much; it could even depreciate slightly. If we talk about the country’s debt, I think the administration is receptive to a weaker currency. So, in Mexico’s case, I think the peso against the dollar should remain stable and might even appreciate somewhat. But the important thing is that the yield is very attractive, as long as you are willing to take that risk. I use strategies in volatility markets, such as selling options on my positions, which allows me to generate even more return. Given that volatility in emerging markets, especially in currencies, is high, very attractive returns can be generated in places like Mexico.

For about three years now, BlackRock has made a significant innovative bet with the launch of iBonds. To some extent, you have been the “brain” behind these vehicles. Are you thinking about something equally revolutionary for the future in the fixed income world?

I think the big change in fixed income is that, for 30 or 40 years, fixed income was that 40 added to the equity portfolio in the classic 60/40. But in recent years it has been shown that it no longer works that way. From 2023 until now, every time the equity market has suffered, traditional fixed income indices have also fallen, because inflation affects both bonds and equities in the same way. The big evolution is that now people think about what to do with that 40 and whether they can build a source of income from it and manage it without taking excessive risks, in such a way that they can combine that income with equities and also with private assets.

What is needed is for fixed income to be stable. Traditionally, people thought they knew how interest rates would behave, but now it is different, and I think it will remain so in the coming years. Interest rates are still a useful tool, when they fall, equities rise and bonds also perform well, but that is not a good hedge nor does it create balance. It simply amplifies both positive and negative returns. The idea of managing a balanced and resilient portfolio has changed, and more and more tools and products are pointing in the same direction: helping investors generate income, which I will combine with equities, private equity, or other assets.

The Fed Heads Into Its Meeting With a Message of Continuity and Powell’s Farewell

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The Fed is expected to keep its benchmark interest rate unchanged at its meeting, despite pressure from the energy sector. According to experts, the information currently available to voting members of the FOMC does not allow for identifying any possible transmission effect of rising energy prices to core prices. So, what can we expect from this meeting?

According to Erik Weisman, chief economist, and Kish Pathak, fixed income analyst at MFS Investment Management, the overall message will be that monetary policy is in a good position to “wait and see” how growth and inflation prospects evolve. “As early as March 18, Chairman Powell downplayed economic projections, given the uncertainty related to the conflict. He is likely to reiterate that the outlook depends on the conflict. Although the uncertainty associated with the war in Iran has decreased since then, it remains very high. Nevertheless, the market will be very attentive to any change in tone regarding growth and inflation prospects,” they acknowledge.

What we do know for certain, as shown by the minutes of the March meeting, is that a minority view is emerging according to which rate hikes may be necessary to protect the inflation aspect of the mandate. “Chairman Powell may have to answer questions seeking to clarify what developments could tilt the FOMC in that direction. He will likely state that it is too early to make that judgment and that monetary policy is in a good position to balance risks on both sides of the mandate. This would be in line with most of the Fed’s communications since the March meeting,” say the experts at MFS IM.

Issues on the Table

For his part, Mabrouk Chetouane, Chief Markets Strategist at Natixis IM Solutions, believes that what is at stake in this meeting is twofold. “First, to anchor investor expectations regarding interest rates and inflation in order to avoid any undesired tightening of financial conditions; and second, to maintain a range of options available to address any type of scenario,” Chetouane notes.

In his view, this energy crisis could lead to a significant decline in aggregate demand. “We believe cyclical risks could materialize and that the Fed’s reaction function continues to place greater importance on economic activity and, consequently, the labor market. We maintain that the Fed could cut its benchmark interest rate by between 25 and 50 basis points between now and 2026, not to satisfy the wishes of the White House, but due to the need to support demand,” he adds.

Given this strong confidence that Powell’s Fed will opt for continuity, Marco Giordano, Investment Director at Wellington Management, recalls that central bank decisions will be determining factors for the global cycle in the coming quarters, as policymakers absorb this latest exogenous shock and act accordingly. “Throughout the month of March, central banks around the world chose to keep interest rates unchanged, citing rising geopolitical risks and uncertainty surrounding inflation prospects driven by energy prices,” he comments.

The Handover Arrives

Another of the most important aspects of the April meeting is that it will be Chairman Powell’s last press conference, if Kevin Warsh is confirmed soon. “He will likely be asked again about his decision to remain a Board member after the end of his term as chairman and how that decision could change if the Department of Justice investigation is closed. Most likely, he will repeat that he has not yet made a decision on the matter,” acknowledges Weisman.

What might a Warsh Fed look like? For Eiko Sievert, Head of Public and Sovereign Sector Ratings at Scope Ratings, if Kevin Warsh is confirmed as the next Chairman of the Federal Reserve, he is likely to advocate for interest rate cuts based on his view that AI-driven growth will not generate inflation.

“His appointment would point to a significant reduction in the intensity of supervision and a shift toward deregulation, as well as a more limited focus on the Fed’s dual mandate of ensuring stable prices and maximum employment. As a result, issues such as climate risk and social equity are likely to receive significantly less attention. Reducing the Fed’s balance sheet will be a priority, although implementation is likely to remain gradual to avoid undue market volatility,” Sievert emphasizes.

Finally, the expert sees it as likely that there will be changes in how the Fed communicates publicly, with less forward guidance on FOMC members’ expectations regarding future interest rates.

“With this background scenario, the June FOMC meeting will be subject to close scrutiny. Rate cuts carried out without data backing a decline in inflationary pressures would signal a weakening of the Fed’s independence,” he concludes.

The Fed Enters a “New Regime,” but What About Its Independence?

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After hearing Kevin Warsh before the Senate, during his confirmation hearing to chair the U.S. Federal Reserve (Fed), experts believe that not all the cards have been put on the table. In his speech, Warsh proposed a “regime change” at the institution, suggesting more than four FOMC meetings, collaborating with the Treasury to reduce the balance sheet, and using AI tools to review inflation models he considers imperfect.

Without a doubt, markets expected Kevin Warsh’s confirmation hearing to offer clues about the Fed’s next steps and, to some extent, it did. His key message was to assure that he would not be a “puppet” of President Trump and that the monetary institution must act without political pressure. He even denied having agreed on interest rate cuts with Trump, arguing that monetary policy decisions must be based on the economy and not politics.

“Let me be clear: the Federal Reserve must make independent decisions. I will not accept instructions from any elected official. My duty, if confirmed, will be to Congress and to the American people. I am also aware of concerns about potential conflicts of interest. I commit to fully complying with all ethical requirements and to divesting from the necessary assets to ensure the integrity of the office,” he assured.

In addition, he was critical of the institution: “In recent years, the Fed has faced extraordinary challenges. However, we must also recognize that there have been errors — in the assessment of inflation, in the communication of monetary policy, and in the management of its balance sheet — that must be addressed frankly.”

Regarding his plans, Warsh explained that his goal will be to restore clarity, discipline, and credibility in monetary policy. “This implies a firm commitment to price stability, a review of the Fed’s strategic framework, and a prudent and predictable reduction of the balance sheet.” And he concluded: “This is an important moment for U.S. economic policy. With the right approach, we can achieve a more stable, more dynamic, and more prosperous economy.”

Independence and balance sheet

For experts at Banca March, however, Kevin Warsh’s appearance unfolded as expected. “Democrats focused their interventions on questioning the candidate’s independence — highlighting the moment when Elizabeth Warren called him a ‘sock puppet’ — while the Republican bloc largely offered its support. Even Republican Thom Tillis expressed his backing, although conditional on the closure of investigations into the current Federal Reserve governor,” they note as the most striking aspect of his appearance.

That said, the main debate for experts is whether this “new phase” will be synonymous with independence. In the view of Laura Torres, chief investment officer at IMB Capital Quant, the market is now operating in a back-and-forth of statements that leaves little definition, high volatility, and uncertainty. “The diplomatic stalemate and the belligerent stance of the Trump administration have created a scenario where complacency is no longer an option. The Fed’s narrative also enters a phase of high volatility with the possible appointment of Warsh, who seems willing to break with the institution’s traditional independence to align it with the fiscal and tariff objectives of President Trump,” Torres criticizes.

From UBS Global Wealth Management, they believe that the Fed remains on track to further reduce interest rates, as cooling inflation and moderating growth should allow the U.S. central bank to act toward the end of this year.

“We maintain the view that the Fed should cut rates by another 50 basis points toward the end of this year. Greater easing should support equities and high-quality bonds in the medium term,” says Mark Haefele, chief investment officer (CIO) at UBS Global Wealth Management.

Regarding the balance sheet situation, Tiffany Wilding warns of the moral hazard arising from the progressive increase in the Fed’s balance sheet as a result of regulatory liquidity requirements in the U.S. financial system: “The growing holdings of Treasury bonds by the Fed needed to satisfy that demand may distort price formation in the market — including Treasury repo funding markets — and reduce liquidity in the public debt market,” Wilding explains.

The other key points

From Oxford Economics, they consider that Warsh will be a more dovish voice within the Federal Open Market Committee, will advocate for an aggressive reduction in the size of the Fed’s balance sheet, and will seek to introduce significant changes in the institution’s communication strategy. However, they recall that the Fed chair cannot make these changes unilaterally, so they expect that Warsh’s need to build consensus will limit the scope of changes in policy or in how the Fed communicates.

“Warsh stated on several occasions that a ‘regime change’ is needed at the Fed. He favors modifying the institution’s current communication strategy and opposes the use of forward guidance as a policy tool, as well as the publication of economic forecasts, which he considers an obstacle to flexibility because members of the Federal Open Market Committee ‘cling to those forecasts longer than they should.’ He also suggested that he might favor reducing the number of FOMC meetings to fewer than eight per year, which is the current schedule; the law requires the committee to meet four times per year. He also did not commit, if confirmed, to holding press conferences after every FOMC meeting, which has been the norm since 2019,” they explain.

Finally, the firm notes that Warsh’s selection “remains in limbo.” According to their forecast, it is expected that the Senate, controlled by the Republican Party, will confirm Warsh if his nomination is approved by the Senate Banking Committee. “However, we expect his candidacy to remain stalled in committee for some time. Senator Thom Tillis of North Carolina made it clear at Tuesday’s hearing that he will not support Warsh’s nomination until the Trump administration’s case against Powell is withdrawn. However, in an interview prior to the hearing, President Trump gave no indication that he would pressure the Department of Justice to drop the case. Given the narrow margin in the committee, the nomination cannot advance without Tillis’s support. This increases the likelihood that Powell will continue as chair beyond May 15, when his term officially ends,” they add.

From J. Safra Sarasin Sustainable AM, they acknowledge that, paradoxically, a delay in his confirmation could work in Warsh’s favor. “With inflation moving in the wrong direction, it is unlikely that the FOMC will cut rates in the short term. A prolonged process would leave Powell bearing the cost of inaction, thus preventing Warsh from having to confront Donald Trump prematurely at the start of his term as chair,” they conclude.

The Evolution of Fintech, the Favorite Sector of Latin American VC

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With technology opening access to different types of financial solutions, creating new markets, and driving inclusion in Latin America, it is no surprise that projections for the fintech industry look promising. And venture capital investors are paying attention. With the consolidation it has achieved—driven by the leading role of digital payments and transfers—so far, and the new growth vectors emerging for the future, the market is closely watching the sector’s evolution.

While local dynamics within the region are shaped by different idiosyncratic factors, at an aggregate level, financial technology companies have been closing gaps in access to various financial products. The result is an industry that reached a market size of $15.23 billion last year, according to consulting firm IMARC Group.

According to the firm, a variety of factors are driving growth. While financial inclusion challenges create demand for accessible digital services, remittance flows require cost-effective transfer solutions. This is compounded by the proliferation of smartphones in Latin America and the regulatory support fintech firms have received in different countries.

Considering these ongoing trends and other growth drivers, the firm estimates that the industry will reach $54.01 billion by 2034. Between now and then, fintechs in the region are expected to grow at a compound annual rate of 15%.

The favorite sector of the venture capital world
Financial technology holds a special place in venture capital portfolios, consolidating itself as their preferred sector.

A survey by specialized firms Startuplinks and Cuantico VP, conducted at the beginning of this year with the participation of 126 Latin American investors—including venture capital funds, CVCs, family offices, and angel investors—shows that 34.9% of respondents expect their next investment to be in a fintech company.

Moreover, the sector is attracting the largest funding rounds in the VC space. During 2025, according to the firms’ data, fintech companies accounted for 29% of financing deals but captured 61% of the invested amounts.

The fintech ecosystem, IMARC emphasizes, “continues to attract substantial venture capital investment,” promoting technological transformation and market expansion initiatives. “Brazil’s sophisticated digital payments infrastructure, Mexico’s progressive fintech legislation, and cryptocurrency adoption in Argentina reflect a variety of innovation paths across the region,” they note.

Payments and open finance as the epicenter
While the Latin American financial technology industry offers a variety of services—including investment management, crowdfunding, and factoring, among others—one segment is emerging as the core of the industry’s boom: digital payments and open finance.

Fitch Ratings highlights that instant payments and open finance are becoming “central pillars” of fintech expansion in Latin America. “They are accelerating payment digitalization and facilitating large-scale data sharing, especially in Brazil, which has the most advanced ecosystem in the region,” the rating agency states in its latest report on the sector.

IMARC data supports this view. As of 2025, payments and fund transfers stand as the dominant segment in the fintech space, with a 45% market share. This, they note, has been supported by unmet demand—by traditional banking—for convenient, accessible, and cost-effective transactional capabilities.

Another important factor is the increasing penetration of technology in people’s financial habits across the region. Data from the World Bank Group shows that 37% of adults in Latin America and the Caribbean had a mobile account in 2024 (latest available data). This figure increased by 15 percentage points compared to 2021. In addition, the region stands out in the share of online shoppers who pay digitally: 27% of adults shop online and 87% use digital payment methods.

Future drivers
Looking ahead, the development of fintech industries will take shape according to the particular characteristics of each market in the region. Given that regulations, market dynamics, and levels of banking penetration vary from country to country, the context will be decisive for the future expansion of the sector.

“In some markets, fintechs have experienced strong growth. In others, they still play a limited role in increasing credit penetration, due to structural barriers such as high cash usage and high regulatory costs,” Fitch notes. These costs, they explain, “can limit product diversification and the ability to scale to a broader offering.”

However, this does not mean there are no general trends attracting Latin Americans. “Evolved fintechs” and financial infrastructure are among the startup segments that VC investors are watching most closely, according to the Startuplinks and Cuantico VP survey.

Specifically, regional capital is closely monitoring B2C neobanks, embedded finance infrastructure, real asset tokenization, and liquidity-providing fintechs, according to the study.

IMARC also adds payment digitalization initiatives, credit scoring methodologies using non-traditional alternative data, and blockchain-based remittance solutions as key growth drivers going forward.

The Global ETF Industry Starts with Record Inflows but Lower Assets Under Management

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Global ETF flows grew by 35% during the first three months of the year, compared with the first quarter of the previous year. According to ETFGI, net inflows of $174.42 billion were recorded in March, bringing total net inflows for the year to a record $626.42 billion.

This means that global ETF assets stood at $20.08 trillion at the end of the first quarter, below the record $21.24 trillion reached in February 2026. “The global ETF industry remains highly concentrated, with iShares, Vanguard, and State Street SPDR ETFs controlling 58.3% of total assets. iShares leads with $5.43 trillion (27.1%), followed by Vanguard with $4.29 trillion (21.4%) and State Street SPDR ETFs with $1.98 trillion (9.9%). The other 991 providers each account for less than 5% of global ETF assets,” highlights Deborah Fuhr, managing partner, founder, and owner of ETFGI.

The destination of flows

According to ETFGI data, first-quarter net inflows, totaling $626.42 billion, are the highest ever recorded, surpassing the previous peak of $463.51 billion in 2025 and $397.51 billion in 2024. March therefore marked the 82nd consecutive month of net inflows into the global ETF industry.

In March, ETFs gathered $174.42 billion in net inflows globally. In terms of asset types, equity ETFs recorded net inflows of $54.12 billion in March, bringing the year-to-date total to $225.64 billion, above the $211.63 billion recorded through March 2025. Meanwhile, fixed income ETFs posted net inflows of $35.44 billion in March, taking the annual total to $119.17 billion, well above the $81.97 billion recorded in the same period of 2025.

Commodity ETFs, for their part, experienced net outflows of $9.83 billion in March; “however, on a year-to-date basis they have recorded net inflows of $16.62 billion, below the $21.91 billion reached through March 2025,” they note. Finally, active ETFs gathered $78.37 billion in March, lifting the annual total to $245.95 billion, significantly higher than the $144.51 billion recorded through March 2025.

The significant inflows can be attributed to the top 20 ETFs by net new assets, which together attracted $94.06 billion in March. “The State Street SPDR Portfolio S&P 500 ETF (SPYM US) alone recorded $16.83 billion,” ETFGI highlights.

Miami Consolidates Itself as the Epicenter of Global Wealth Management Amid Structural Disruptions

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Photo courtesyLuis Arocha (Capital Group); Rocío Harb (IPG); Catherine Lapadula (UBS) and Maribel Maldonado (Merrill Lynch)

In a context of profound transformation in the wealth management business, the panel “Challenges and Opportunities in Wealth Management” brought together international segment leaders in Miami to analyze the forces reshaping the industry, from regulatory pressures to demographic and technological changes.

Moderated by Luis Arocha, Business Development Manager at Capital Group, the panel stood out not only for the level of experience of its participants—Rocío Harb (IPG), Catherine Lapadula (UBS), and Maribel Maldonado (Merrill Lynch), but also for the consensus around a key point: the business is going through a structural, not cyclical, moment.

From the outset, Arocha framed the conversation within a broader trend: the geographic shift of financial power. “Twenty-five years ago, if you wanted to influence global wealth, you went to New York or Wall Street. Today, many of the key conversations about international capital and cross-border wealth are taking place in Miami,” he stated.

A more complex business: regulation, margins, and technological disruption

Catherine Lapadula, Managing Director and Market Executive International at UBS, outlined a challenging landscape marked by multiple simultaneous fronts. “The challenges are not only related to the market. They are structural, regulatory, and generational,” she noted.

From her perspective, increasing global regulatory pressure—with frameworks such as MiFID II, FATCA, or CRS—has significantly raised operational complexity. “International is not a hobby. It’s like pregnancy: you either are or you aren’t,” she warned, emphasizing that compliance will continue to intensify.

This is compounded by margin compression driven by transparency. “Wealth managers have to justify their fees. Price is the only issue in the absence of value,” she stated, highlighting that differentiation will come from service, advice, and tailored solutions.

Lapadula also pointed to the dual impact of technology: “Fintechs and robo-advisors are both an opportunity and a threat,” although she clarified that the ultra-high-net-worth segment will continue to demand highly personalized advice.

The feminization of wealth and generational transition

One of the panel’s most relevant points was the ongoing demographic shift. “For the first time in history, we have what we will call the feminization of wealth,” Lapadula stated. “Trillions of dollars will change hands over the next 10 to 15 years… and a large portion will go to women.”

The implication for the industry is direct: “If you’re not talking to the wife, the girlfriend, or the daughter, you’re missing out,” she warned, noting that communication and approach must adapt to new wealth decision dynamics.

Talent, compliance, and artificial intelligence

Rocío Harb, Director and Branch Manager at IPG, agreed that regulation remains one of the main challenges, especially in an environment of accelerated technological innovation. “The business evolves and regulation increases, and that is always a challenge,” she explained. In particular, she highlighted the integration of artificial intelligence under strict compliance frameworks: “Incorporating AI into our daily routine while continuing to comply with regulations will be a major challenge.”

This is compounded by competition for talent in a market like Miami. “There are wonderful institutions with talented people. For us, the focus is on ‘white-glove’ service and on growing advisors,” she noted.

AI and the risk of losing the human touch

From a more behavioral perspective, Maribel Maldonado, International Wealth Management Advisor at Merrill Lynch, focused on the client relationship in the era of artificial intelligence. “AI is intelligence on demand,” she said, anticipating more informed and demanding clients. However, she warned of a growing risk: “Dependence on AI is leading to a lack of personal touch.”

In this sense, she emphasized that the advisor’s value is not diluted but redefined: “Nothing is more important to clients than being able to trust you to help them interpret all these changes.”

Miami: from emerging market to structural capital hub

One of the clearest points of consensus was Miami’s role as a new nerve center for international wealth management. Maldonado traced the city’s historical evolution: “Miami went from being a small enclave to a global cosmopolitan center,” and projected that “it will be one of the 20 richest cities in the world in the not-too-distant future.”

Lapadula went further by describing a structural shift: “Miami is not just a trendy city. It is a reorganization of capital. Capital lives here, is managed here, and is capitalized here.”

This phenomenon responds to a “flywheel effect,” she explained: the arrival of wealth drives real estate investment, which attracts more capital and, in turn, wealth managers. “For the first time, firms are coming to where the clients are,” she noted.

Alternatives: from niche to structural component

In terms of investment, the panel highlighted the growth of alternative assets as a key differentiator. Harb explained that IPG bet early on this trend: “Our clients needed something beyond the 60/40 portfolio,” which led to the development of proprietary solutions such as IPG ALTS.

Maldonado reinforced the idea from a structural perspective: “In the United States, there are 200,000 companies and only 5,000 are publicly listed,” making the integration of private markets increasingly logical. She also emphasized the democratization of access: “Minimums have dropped considerably… we are going to see a clear movement in that direction.”

From UBS, Lapadula proposed a balanced “barbell” approach, combining real assets, high-quality fixed income, and private markets, with an emphasis on liquidity in a more volatile environment.

Work-life balance: an evolving challenge

The panel closed by addressing a cross-cutting issue: the balance between personal and professional life, especially in a historically demanding industry. Harb was direct: “Do we really balance? Maybe not,” acknowledging personal sacrifices, especially in early stages.

Lapadula summarized her approach in one phrase: “I delegate tasks, not time,” prioritizing key moments both personally and professionally.

For her part, Maldonado proposed a pragmatic formula based on three decisions: “Deal with it, Delegate it, or Discard it,” also highlighting that technology has expanded the possibilities for balance. The final consensus pointed to a broader cultural shift, where family and work dynamics are evolving toward a more collaborative model. “It’s a team sport,” Lapadula concluded.

Securitizations in 2026: Subordination, Volatility, and Technical Demand According to Janus Henderson

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Dennis Deane, gestor de estrategias de renta fija en Janus Henderson Investors
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As part of the Leaders Summit, a professional gathering in Miami organized by Funds Society, Dennis Deane, fixed income strategies manager at Janus Henderson Investors since 2025, analyzed two key segments of the securitization market: triple-A CLOs and agency mortgage-backed securities, and outlined a macro scenario without surprises, with a prevailing higher-for-longer environment, in a context of war in the Middle East, concerns about artificial intelligence disruption and its implications for credit.

“We had a higher-for-longer rates stance and that has not changed,” Deane said at the start of his presentation. He also described a landscape where the 10-year Treasury remains stable unless a deep recession emerges: “I find it hard to imagine a scenario in which 10-year yields fall significantly, given the situation with energy prices. Unless, of course, one assumes we are heading into a recession. That is not our view. So the firm’s overall view is a steep yield curve, or at least relatively stable 10-year yields. Obviously, forward expectations for Fed rates have declined significantly,” he noted.

On technological and geopolitical risks, he emphasized that the market tends to overreact: “I have seen very negative artificial intelligence disruption scenarios for credit. They are extreme scenarios. They do not represent the base case. Most base cases foresee only moderate increases in defaults. For investors in triple-A CLOs, that is not really a concern,” he said.

CLOs triple A
The core of the presentation focused on the risk structure of triple-A CLOs. Deane analyzed three aspects: default risk, liquidity, and the likely investor experience. Regarding the safety of triple-A CLOs, he stated: “There has never been a default in this segment, neither before nor after the crisis.” He attributed this resilience to the subordination structure: “To impact a triple-A investor, corporate defaults—adjusted for 30% recoveries—would need to exceed 50%. As a reference, at the worst point in 2009, defaults were only around 10% and the five-year cumulative did not exceed 16.7%,” he said, concluding bluntly: “A 50% scenario would be unprecedented; if it were to occur, the collapse of CLOs would be the least of your problems.”

Regarding the second point, one of the more technical aspects highlighted by the Janus Henderson manager was the behavior of the secondary market. “Average annual volume in CLOs had been around $4 billion. In March, the first two weeks exceeded $10 billion in triple-A tranches alone,” he explained.

This reduced bid-ask spreads and improved market depth even in ETFs: “Markets function well. They worked during Liberation Day and they continue to function,” he said, adding: “Even in 2020, with carry, returns were positive.”

Deane presented a historical series based on a base price of USD 100, without carry. “The red line—triple-A CLOs—remained stable. The low was around USD 95.5 in 2020. With carry, even that year delivered positive returns.” He argued that this stability is explained by three combined factors: ultra-low duration (~0.2), structural seniority, and recurring purchases by banks and insurers during downturns. “When dislocations occur, sophisticated investors step in. That is the natural dynamic of the asset,” he stated.

While some segments of the market seek to position AAA CLOs as cash equivalents, Deane made a professional distinction: “It is not cash. I am uncomfortable calling it a cash alternative. But as an ultra-short duration instrument with high-quality carry, it is entirely appropriate.”

In his presentation, Deane also recalled that, during last summer, reports circulated about alleged irregularities in the origination of auto loans linked to Tricolor Auto Group, a lender specialized in subprime auto credit. That news raised concerns about the integrity of securitized assets in general. To ease concerns, he cited an audit conducted by Fifth Third, lender and collateral reviewer: “They reviewed all the collateral of more than 120,000 auto loans and found two missing chassis numbers. That is the real scale of the issue. It can happen, but it is not widespread.”

Mortgage-Backed Securities: the other end of the portfolio
After the CLO-focused section, Deane moved on to agency MBS, where Janus Henderson Investors manages two core vehicles: the active ETF JAAA and the MBS fund JMBS, with more than USD 7 billion. In this section, he stated: “When you buy a mortgage-backed security, you are buying a bond with a prepayment option. That is based on the fact that implied volatility tends to overestimate realized volatility.” He explained: “The least efficient long-option holder in the world is a homeowner. It takes dozens of calls from the bank and a conversation at a party to decide to refinance. That is the optionality I want to sell.”

The manager also explained that the compression of spreads in 2025 was driven by lower volatility and coupons more aligned with current rates. “Spreads compressed from 145 bps. Then they widened to 125 bps due to geopolitical events. It is a moderate adjustment,” he said. One of the bottlenecks for tighter spreads was the lack of bank demand following the 2022 crisis: “Banks had unrealized losses and their deposits were not growing. That slowed purchases,” he noted.

However, Deane indicated that this dynamic is changing: “With rates declining in the second half of last year, banks are returning. And more favorable risk requirements under Basel III help.”

On agency purchases (~USD 200 billion), he said: “They are not a compression catalyst. They are a ceiling. When spreads widen, they buy. That is their technical role.” He also outlined an ideal rate structure: “A steep curve and an anchored 10-year.”

Deane summarized the optimal setup for MBS as follows: “The curve must be steep. And the 10-year must remain stable. If rates fall too much, mortgages prepay, duration collapses… and you do not capture the Treasury rally.”

Regarding return expectations, he maintained a narrow range: “An 8.6% return like last year is unlikely. But 6%–6.5% is reasonable if volatility normalizes.”

Deane closed with a structural allocation proposal:

  • Short end of the curve: “For stable carry, minimal duration, and very high quality, triple-A CLOs are extremely efficient.”
  • Long end: “Agency MBS are high-quality assets. The guarantee is implicit, but the market prices it as if it were explicit. And that will not change.”

Juan Alcaraz Dies, Founder of Allfunds and Key Figure in the Transformation of Global Fund Distribution

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Juan Alcaraz founder of Allfunds
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Allfunds has announced with deep sorrow the passing of Juan Alcaraz, founder of the company and Chief Executive Officer for more than twenty years, whose strategic vision was instrumental in establishing the firm as the leading global fund distribution platform.

Alcaraz founded Allfunds more than twenty-five years ago and led its international expansion during a period marked by innovation, sustained growth, and the consolidation of the group as a key player within the wealth management industry. His leadership transformed the company into a global benchmark in the financial sector and in wealth management.

The company highlights his foresight, his commitment to business development, and his constant enthusiasm for driving new growth opportunities. His role was decisive in building an organization with a global presence and a leadership position within the fund distribution market.

Beyond his business career, Juan Alcaraz was recognized for his vocation for service, his approachability, and his commitment to the professional development of those who worked alongside him. His dedication to talent and the training of new professionals left a deep mark within the organization.

Likewise, Allfunds has underscored his involvement in promoting the company’s philanthropic culture. His continued support for charitable initiatives and his interest in strengthening corporate social responsibility were an essential part of his legacy, an area that, according to the firm, brought him particular enthusiasm and pride.

The Board of Directors, the management team, and all Allfunds employees have extended their condolences to the family of Juan Alcaraz, as well as to all those who shared in his professional and personal journey. The company thus bids farewell to one of the most influential figures in its history and one of the main drivers behind the evolution of fund distribution at an international level.

Pimco Launches a New Inflation-Linked ETF

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inflation linked ETF by PIMCO
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Pimco has expanded its exchange-traded fund offering with the launch of the new PIMCO Inflation PLUS Active ETF (PCPI). It aims to offer investors concerned about rising inflation more direct protection, lower volatility, and limited interest rate risk compared to Treasury inflation-protected securities (TIPS).

The PCPI is designed to limit interest rate risk and add incremental return potential through active management. It seeks to achieve real returns by investing primarily in short-term TIPS and other inflation-linked securities, and by actively managing the portfolio as market and inflation conditions change.

The PCPI will be managed by Daniel He, Executive Vice President; Michael Cudzil, Managing Director; and Tanuj Dora, Senior Vice President.

“The latest addition to our ETF range continues PIMCO’s tradition of offering innovative fixed income solutions designed to support long-term investment objectives,” says Kim Stafford, Global Head of Product Strategy at Pimco. Investors will be able to trade the PCPI on the NASDAQ starting April 6, 2026.