Brazilian equity funds reaping benefits of Ibovespa climb

Fueled by October’s substantial 11.2% upturn in the Ibovespa, Brazilian equity funds were atop the industry’s return rankings, also recording the industry’s highest year‐to‐date returns.

Once again, FMP‐FGTS and single-equity funds were propelled by rising prices of shares with a high presence in the Ibovespa index, like Vale and Petrobras, posting the industry’s best returns for the month (23.4% and 20.9%, respectively), and year-to-date (92.7% and 84.6%).

Free portfolio and Ibovespa active funds, with the highest AUM of their class, also performed well, albeit less so, recording healthy returns of 7.3% and 9.7%, respectively, in October, and 33.1% and 41% in the 10 months.

According to a report published by ANBIMA, the lower‐than‐expected reduction in the Selic base rate target in October was reflected in the reduced appreciation of indexed fixed-income securities, in turn jeopardizing returns in this asset class, especially fixed-income indices and long-duration types.

In the Balanced/Mixed class, the Dynamic, Long and Short Directional, and Long and Short Neutral types recorded the best performances of their class, with respective returns of 3.2%, 3.1% and 2.3%. The latter two, whose operations are exclusively restricted to the equity market, also recorded the best year‐to‐date returns of 16.6% and 18.7%, respectively.

The industry recorded net inflows of BRL 1.2 billion (USD 300 million) in October, led by inflows to Fixed Income (BRL 6.6 billion) and Retirement Funds (BRL 3 billion), more than offsetting the net redemptions posted by the Balanced/Mixed (BRL 4.1 billion) and Credit Receivables funds (BRL 4.4 billion).

As a result, the industry accumulated net inflows of BRL 80.5 billion in the first 10 months, the highest result for the period since 2012.