Today, markets react strongly to the daily flow of news. In an environment marked by geopolitical tensions, inflationary pressures, and changing financial conditions, this dynamic translates into greater volatility for portfolios built exclusively on traditional instruments.

In this context, private debt — particularly funds based on invoices and promissory notes — positions itself as an alternative for diversifying risk and capturing the banking disintermediation premium.

Its main attribute is its low correlation with market sentiment. Unlike stocks or publicly traded bonds, whose valuations are subject to mark-to-market fluctuations, private debt follows a dynamic more closely linked to the real economy cycle. Since it is backed by goods and services already delivered, an invoice accrues linearly until payment, reducing exposure to fluctuations derived from short-term financial events.

An especially relevant element in the Chilean market is the legal framework. Law 19,983 grants enforceable legal status to the transferable copy of an invoice, facilitating direct collection under conditions comparable to other enforceable instruments.

At the same time, the incorporation of corporate promissory notes allows for the structuring of direct financing for non-bank companies, enabling a more precise adjustment of the relationship between risk and return within the portfolio.

This stability, however, requires certain conditions. Capturing the illiquidity premium implies committing capital for periods ranging between one and three years. Furthermore, although these instruments are less exposed to market noise, they remain linked to the real economic cycle. In recessionary scenarios, credit risk and delinquency rates tend to increase.

For this reason, the focus is not only on the instrument itself, but also on management. The consistency of the model depends on the institutional quality of the manager and the risk mitigation structure. This includes diversification among payers, anti-fraud controls, rigorous credit analysis, recourse operations — where the originator remains liable in the event of non-payment — and the incorporation of additional guarantees.

For qualified investors, participating in well-structured factoring funds allows access to a source of returns with lower exposure to the volatility of public markets.

In an environment of high financial uncertainty, access to more predictable cash flows can help improve the portfolio’s risk-return relationship, always considering the credit nature of the asset and the importance of proper risk management.

Isolating oneself from noise is not about avoiding risk — it is about managing it better.

León Hatton
Investment Analyst