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The IPSA is a Chilean index which follows the performance of 40 stocks traded on the Santiago Stock Exchange. It stands for Indice de Precio Selectivo de Acciones, and it is one of the most widely used indicators of the strength of the Chilean economy.
On this page you’ll find a brief history of the IPSA index, a summary of how the stocks that it tracks are selected, and information about how you can invest in its performance over time.
The IPSA has been calculated since 2002, and is structured so as to track the 40 most liquid and highly traded stocks on the Santiago Stock Exchange. The Santiago Stock Exchange has been a prominent feature of the Chilean and South American economic landscape since it was founded in 1893, and alongside the IPSA are two other indices that follow the exchange: the IGPA and Inter-10.
The IPSA rose sharply over the start of the 21st century, before falling by over 1000 points (just under a third) during the global economic crisis of 2008. It recovered strongly from this point, reaching its all-time high of 4,988.08130 in November 2011. The 2010s saw another drop and some stagnation however, and although the IPSA rallied to nearly 4,500 in 2018, the Chilean economy began to head south again – an effect that was exacerbated greatly by the COVID-19 pandemic of 2020.
The IPSA aims to include the 40 most liquid stocks traded on the Santiago Stock Exchange. IN order to be eligible for inclusion, constituents must already be members of the larger IGPA index, and also meet the following criteria:
Stocks must have a six-month median value traded ratio (MVTR) of at least 10% to be eligible for index inclusion (7% for current constituents). Constituents must have a versatility presence greater than or equal to 90% (85% for current constituents).
Stocks must have a float-adjusted market cap greater than or equal to CLP200 billion (CLP 160 billion for current constituents).
The IPSA index is weighted by float-adjusted market capitalisation, and is subject to a 15% single stock cap.
The easiest way to invest in the IPSA index is with either an ETF or a mutual fund. Both of these products will allow you to invest in the performance of all 40 stocks listed by the index with only one transaction. Mutual funds are a good option if you’re looking to buy and hold for a long time, but incur relatively high fees and can only be bought or sold at the end of each trading day. ETFs (exchange-traded funds) give investors similar diversification, but also come with the flexibility of being able to be traded on an exchange at any time. If you’re planning on trading in the short term, ETFs are usually a good option.
The other method you can use when it comes to investing in indices is to buy all of the stocks that an index tracks. This can be a good strategy with blue-chip indices such as the Dow Jones Industrial Average, but carrying out 40 individual transactions to track the IPSA is likely to be too costly in terms of time and fees to be worth considering seriously.