Tags: soros | argentines | inflation | fintech

Soros-Backed Fintech Offers Argentines Way to Beat 50 Percent Inflation

Soros-Backed Fintech Offers Argentines Way to Beat 50 Percent Inflation
(Michael Gottschalk/AP)

Wednesday, 13 November 2019 11:11 AM

Argentina’s Ualá, the mobile payments app backed by heavyweight investors George Soros and Steve Cohen, is offering its users the possibility of investing in a low-risk mutual fund through the app.

The option to invest cash stored in the electronic wallet into a money-market mutual fund in pesos comes as part of a partnership with local broker SBS Asset Management SA, said Ualá founder and Chief Executive Officer Pierpaolo Barbieri. Users will have the option of investing as little as one peso -- two cents on the dollar -- into a fund that invests in time deposits and remunerated accounts.

The move comes as Argentines seek to maintain the value of their savings amid capital controls and 50% annual inflation. The government tightened capital controls after opposition leader Alberto Fernandez won the presidential election in Oct. 27, restricting dollar purchases by savers to just $200 per month compared with $10,000 per month previously. Argentines tend to flock to greenbacks amid volatility, a response to several financial crises and a currency that has only weakened over time.

“When there’s capital controls, you need to give people a way to preserve the value of their pesos,” said Barbieri in a phone interview from Buenos Aires. “Our aim with this fund is to give savers a good cash management tool, to allow them a daily income from the day of their payslip until they need to spend it on products and services.”

The fund invests in conservative instruments including time deposits and avoids risky bonds.

Ualá has issued 1.3 million prepaid cards since it started operating in October 2017, as part of a bet on long-term growth in a country in which less than half of the population has a bank account. In addition to early-backers Soros and Cohen, Goldman Sachs Group Inc. and Chinese internet giant Tencent Holdings Ltd have also announced investments in the company. Ualá started offering its users loans in the middle of the year.

The peso fund, which will allow for same-day redemptions, was designed for Ualá and will be managed by SBS Head Portfolio Manager Cristian Brau. The fund’s management fee is 2% in pesos with no spread over performance.

“This is a product with zero chances of default,” Barbieri said. “We want to convince people that every day their pesos sleep in a savings account, they lose money. The fund will allow them real positive rates at a time where they can’t freely buy dollars.”

The company opened more than 52,000 accounts exceeding 32 million pesos in a beta stage launched to some clients in early October. Ualá, which has 175 employees, expects to expand to 200 by year-end.

© Copyright 2020 Bloomberg News. All rights reserved.


   
1Like our page
2Share
StreetTalk
Argentina's Ualá, the mobile payments app backed by heavyweight investors George Soros and Steve Cohen, is offering its users the possibility of investing in a low-risk mutual fund through the app.
soros, argentines, inflation, fintech
443
2019-11-13
Wednesday, 13 November 2019 11:11 AM
Newsmax Media, Inc.
 
Newsmax TV Live

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved