Private-Client Fund Distribution in Brazil

An undeniably attractive wealth-management marketplace has developed in Brazil as a result of a stable political environment, a flourishing economy, a strengthening currency, a boom in foreign capital flows to fund mergers and acquisitions and private-equity deals, a spike in real-estate prices, and surging demand for commodities. Investors with US$1 million or more to invest is approaching 200,000, with tens of thousands more being created each year.

Almost half of the hundreds of billions of dollars in Brazilian wealth-management assets are allocated to mutual and hedge funds, followed by direct investment in fixed-income and equities. Brazil is Latin America’s largest mutual fund market and is home to more than 400 specialty asset-management shops.

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While Brazil was once a haven for cross-border asset-gathering, it is now a decidedly onshore market. Managers with a long-term vision that seek to gather assets in the country are urged to consider on onshore operation. Wealthy Brazilians’ posture over the years toward investing in non-domestic vehicles has been impacted by numerous factors, especially institutional stability, tax policy, local interest rates, local exchange rates, local-stock-market performance, and the global political economic outlook.

Large multinational players no longer dominate the Brazilian wealth management sector. The firms – which had no expertise on Brazil and no local products, either – lost their mojo when Brazilians’ confidence in their own country improved and their bias for capital preservation in US Dollars ended. The wealth-management business in Brazil is now dominated by distributors offering onshore solutions, such as domestic banks like Itaú, Banco do Brasil and Safra, local multifamily offices and boutique advisories.

Brazil is relatively friendly to pure-play managers. An open-architecture approach is supported by two widely accepted practices in Brazil: the use of funds of funds and the use of exclusive funds that are custom-made for one investor or up to a handful of investors. Many of Brazil’s independent asset managers are run by well-known ex-bankers, economists, central bankers, etc. , and the renown of these personalities is an important selling point for distributors, since access to them is important for clients.

Over the last three years, there has been a steady stream of acquisitions of firms that are very active in Brazilian wealth management circles, with the purchasers mostly international firms. The wave began with acquisitions of boutique asset management companies, but more recently been focused on niche distributors.

The advisory component of wealth management in Brazil is constantly improving, thanks in part to the existence of the Certified Financial Planner (CFP) program, which is supervised locally by the Brazilian Institute for the Certification of Financial Professionals (IBCPF).

Close to 20 major mutual fund brands were identified as having some sort of presence in Brazil, ranging from the housing of research analysts to support cross-border BRIC funds to full-fledged local fund operations with a complete lineup of locally-domiciled products. The report provides details on activities on most of the managers while analyzing which approaches have the most merit.

• Published: 2Q 2012
• Report length: 53 pages
• Number of Exhibits: 26
• Delivery Format: PDF
• List Price: USD 1,995.
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