Brazil’s Asset Managers Look to Expand Abroad
The World Cup will continue to be the dominant story coming out of Brazil for a few weeks yet, but after the final match is played on July 13 the focus will likely shift back to the country’s sputtering economic growth, surging inflation and soaring political tension.
Once one of the brightest lights in emerging markets, Brazil has seen its prospects dim in the past couple of years. Real gross domestic product growth plunged from 7.5 percent in 2010 to 2.3 percent in 2013 — and in the first quarter of this year plummeted to an annualized rate of just 0.8 percent. Consumer prices jumped 5.9 percent last year, far above the central bank’s target of 4.5 percent, and inflation is on track to hit 6.4 percent this year. The real continues to weaken against the dollar despite policymakers’ efforts to prop up the currency via tax cuts and other initiatives.
The economic difficulties, in turn, are helping spread political uncertainty by eroding popular support for President Dilma Rousseff, who was once regarded as a shoo-in for reelection in October but has seen her opinion poll lead shrivel.
Dampened growth and heightened political risk make a toxic cocktail for companies in the world’s seventh-largest asset management industry. The pressure is evident in the Brazil 20, Institutional Investor’s exclusive annual ranking of the country’s largest asset managers. All but two of the firms — Credit Suisse Hedging-Griffo Asset Management, the Brazilian money management arm of the Swiss bank, and J. Safra Asset Management, part of Brazilian lender Banco Safra — saw their assets under management decline in dollar terms in the 12 months through March. For most managers, the declines were smaller in scale than the real’s 11 percent fall against the dollar during the same period. Even so, the industry’s fortunes have fallen back to earth compared with the robust growth rates of a few years ago.
To view the complete ranking and the firms’ portfolio mixes, click on the links in the navigation table at right.
For information on how this ranking was compiled, click on Methodology.
How This Ranking Was Compiled
Institutional Investor’s annual ranking identifies Brazil’s top 20 fund managers, by assets. São Paulo–based Researcher Milena Mazzola Moreti compiled the ranking under the guidance of Senior Research Editor Jane B. Kenney, using data from questionnaires the institutions filled out themselves. II staff refined these data through follow-up e-mails and telephone calls. All figures are in millions of U.S. dollars, as of March 31 of the given year. Where necessary, values were converted from reais using the exchange rate on the respective date.