For Brazil's Asset Managers, It's All About Yield
To investors around the world who are complaining about low interest rates, Brazilian asset managers might be tempted to advise, be careful what you wish for.
Recession, political scandal and rising inflation have hammered Brazil’s capital markets over the past year and prompted many wealthy Brazilians to seek to place more money overseas. The only thing preventing wholesale capital flight is the country’s sky-high interest rates, industry executives say.
On June 6 the central bank’s monetary policy committee raised its benchmark Selic rate by 50 basis points, to 13.75 percent, the tenth rise since the start of 2014. With inflation running at a rate of 8.47 percent, well above the central bank’s target of 4.5 percent, investors are enjoying high real interest rates of 5 percent or so. Such rates have attracted investors to local products such as tax-exempt bonds, agribusiness credit bills and real estate credit bills offered by commercial banks.
“Investors, even sophisticated ones, have gone back to basics and are investing in these types of products,” says Flávio Souza, head of wealth management services at Itaú Unibanco. The bank takes second place in the Brazil 20, Institutional Investor’s ranking of Brazil’s top asset managers, with $128.1 billion under management, behind Banco do Brasil Gestão de Recursos, with $182.8 billion. “However, despite the high interest rates, they still want to invest overseas because of the challenging local scenario, and to protect against currency devaluation.”
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 The 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 Editor Jane B. Kenney, using data from questionnaires the institutions filled out. II staff refined the 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.