In 2021, Brazilians set a record for investments abroad

RIO — Brazilians have never invested so much abroad. The desire to protect assets from inflation that already exceeds 10% a year has fueled the search for investments abroad. With greater demand, managers are betting on the launch of international funds aimed at the general public, no longer just for qualified investors.

Equity invested abroad grew 28.7% in November, compared to the same month in 2020, and reached a record volume of R$ 827.19 billion. The data are from the Brazilian Association of Financial and Capital Market Entities (Anbima).

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In 2021, the Ibovespa, the main index of the Brazilian stock exchange, accumulated a drop of 11.92%. In fixed income, despite the Selic being at 9.25%, investments indexed to the basic interest rate yielded only 4.42% in the year.

Meanwhile, the dollar rose 7.47% in 2021. And the S&P 500 index, which brings together stocks on the New York and Nasdaq stock exchanges, advanced nearly 30%.

— There is a much greater variety of assets abroad than in Brazil, in an environment of greater stability. The average Brazilian got used to investing in Brazilian stocks recently, and now he’s starting to get more sophisticated — explains Marcelo Weber, CEO of Invexa Capital.

In December, the manager launched two Brazilian Depositary Receipts (BDRs) funds for direct investment by shareholders. They are certificates that represent shares issued by companies in other countries.

Icatu Vanguarda also recently launched a multi-strategy fund, with fixed income and shares, among other assets, all abroad. The manager’s portfolio manager, Fernando Palermo considers the internationalization of Brazilian investors a natural movement in the market.

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In the third quarter of 2021, the Brazilian stock exchange, B3, registered 3.3 million registered CPFs, a 30% increase over the same period in 2020 and a historic record. For Palermo, after adapting to the universe of variable income, it is natural for individuals to look for new investment options:

— The idea of ​​diversification is to be exposed to different cycles. Even if Brazil were in a good moment, it makes sense to have part of the resources abroad, because while one is doing badly, the other is doing well, and on average this will generate positive returns.

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With an eye on this new investor profile, Nextep, a manager exclusively focused on managing a portfolio of global assets, decided to open its international fund for investments starting at R$1,000. Created in 2009, it previously required a minimum initial amount of R$ 50 thousand.

— Anyone who is in Brazil and only invests in shares here is missing most of the party. B3’s market capitalization is 1% of the world stock market. In addition, a good part of the items that make up inflation are strongly influenced by the dollar. I don’t know if the investor is aware of this, but this is certainly one more reason to allocate part of the resources in dollars — explains Rodrigo Lobo de Andrade, partner of the manager

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Attention to volatility

And to attract more conservative investors, Urca Capital Partners intends to launch a product for application in real estate in the United States in the first half of the year. It is an investment company: a offshore that will buy developments like open-air malls in Florida, for example. The company will make an initial public offering of shares (IPO) on an American stock exchange and will have a BDR traded in Brazil.

— Instead of the investor buying a share of the fund, he will buy a share of the company. And you will receive dividends in dollars. It is a product that does not exist in the Brazilian market today — says Leonardo Nascimento, partner at Urca Capital Partners.

The greater offer of products abroad also became part of the brokers’ strategy. XP, for example, doubled the amount of international funds in 2021, from 90, with BRL 13 billion under management, to 180, with BRL 26 billion. For this year, the goal is to reach R$ 50 billion.

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Thiago Penna, founding partner and CEO of 3A Investimentos, points out that this year will be “very challenging”, due to elections, fiscal framework and withdrawal of financial incentives in the US. But he considers that investment abroad must be done gradually:

— There is no need to be anxious and send 100% for applications abroad. The dollar was close to R$ 5.70, but it may not remain at this level.

Nascimento, from Urca, warns that investors will be exposed to the volatility of the dollar and that liquidity may not be immediate.

Discover the most attractive international investments for Brazilians:

Brazilian Depositary Receipt (BDR)

The BDR, or securities deposit certificate, is an asset issued in Brazil that represents another asset issued by publicly-held companies, or similar, headquartered abroad. It is a way for investors to buy shares traded on international markets directly on the Brazilian stock exchange. Some BDRs available on B3 are from Alphabet Inc. (Google), Amazon, Tesla, Apple, among others.

Exchange Traded Fund (ETF)

The Equity ETF, also known as the Exchange Traded Fund, is an Exchange-traded fund that represents a portfolio of stocks that seek returns that generally correspond to the performance of a benchmark index. Thus, the investor can buy shares in a fund that is backed, for example, in the New York stock indexes.

exchange fund

They are investment funds that have at least 80% of their equity invested in assets that are directly or indirectly related (via derivatives) to foreign currencies or to the variation of an interest rate called the exchange coupon.

Investment fund abroad

They include ETF, foreign exchange, BDRs and multimarket funds with equity invested abroad. In the first half of this year, the Brazilian Securities and Exchange Commission (CVM) should issue a new rule for investment funds, with changes to facilitate portfolio diversification. Among the possibilities studied is the authorization for funds destined to the general public to apply 100% of the resources abroad.

Real Estate Investment Trust (Reits)

Reits are companies that operate rents from real estate in the United States. They work in a similar way to real estate funds. In Brazil, it is possible to invest in these companies through ETFs or BDRs.

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