CDI is an almost unbeatable indexer. This quality can be obtained not only by the return, but also by the low risk. Experienced multimarket fund managers with large teams invest enormous effort and resources to beat it. Few succeed and when they succeed they are very well rewarded. However, there is another low risk index that most investors despise.
This indexer that I’m going to introduce you to brings together unique characteristics that characterize it as a low-risk application. It is made up of fixed income securities only. These bonds have a short-term maturity, that is, less than five years. The bonds are issued by the national treasury. Finally, they still have protection that the CDI does not. Protection against inflation.
Remember that I mentioned that experienced hedge fund managers spend fortunes and energy to earn from CDI?
In fact, in five-year windows, since 2008, the average of multimarket funds beats the CDI in 98% of the windows. That is, in almost any month that you had invested in this average, your gain would be higher than the CDI in a 5-year horizon.
This average of Brazilian hedge funds is calculated by Anbima and is represented by the IHFA index.
But there is a problem. You cannot invest in the average of multimarket funds, as it currently comprises 311 funds.
However, the index that I want to present to you, beat this average of multimarket funds in all history since 2008.
Since March 2008, the CDI has yielded 245%. The IHFA has appreciated 341%. A good result, as it represents 139% of the CDI return.
However, the index I would like to introduce you to yielded 406% in this same period. This represents a return of 166% of the CDI and 119% of the IHFA.
Since December 2003, in five-year investment windows, this index has never lost the CDI. Its return throughout this period was 830%. This represented 157% of the CDI for the period.
If you had invested R$ 108 thousand in December 2003 in this index, you would have today just over R$ 1 million. The index that achieved this feat is the IMA-B5.
The IMA-B5 is the index of public securities referenced to the IPCA with a maturity of less than five years.
There are a number of fixed income and private pension funds that use this index as a benchmark. Some funds even manage to beat the IMA-B5 by taking advantage of the private credit premium. Also, there are funds that accompany this index and are even exempt from IR. This is a feature that makes investing even more interesting.
If you want to beat the CDI in five-year investment windows, consider investing in products that have the IMA-B5 as a reference index.
Michael Viriato is an investment advisor and founding partner of Investor’s House
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I have over 8 years of experience in the news industry. I have worked for various news websites and have also written for a few news agencies. I mostly cover healthcare news, but I am also interested in other topics such as politics, business, and entertainment. In my free time, I enjoy writing fiction and spending time with my family and friends.
