A resource management strategy that produces long-term results is not simple, nor can it be left in the hands of beginners. In Brazil, dozens of experienced multimarket fund managers struggle every day to stand out, but few succeed. Recently, digital influencer Thiago Nigro also started a resource management venture. We simulated his much-talked-about strategy to find out what results it would have produced.
Grupo Primo is perhaps the most successful personal finance educational group in the country. But being successful in education is not a passport to success in resource management.
In March of this year, they bought Fintech Grão with the aim of expanding horizons for asset management.
One of his first steps with this acquisition was the much-vaunted launch of the ARCA strategy that Nigro often mentions in his training and lives on social media.
ARCA is an acronym for Shares, Real estate (real estate), Cash and International Assets.
The sense of strategy in terms of diversification makes sense. However, this makes the product even more dangerous, as its risk is reasonably high and the investor may be attracted to the figure of the influencer.
The danger lies in the allocation ratios in risky assets.
As described in your sitethe fund must invest 30% in Brazilian equities, 10% in real estate funds, 40% in cash and 20% in international ETFs.
A percentage of more than 60% in risky assets such as stocks and real estate funds is a much higher risk than that of several high risk hedges, which is already higher than the average hedges.
As shown in the figure above, if we weight these assets over the past eleven years, ARCA would have achieved a cumulative return of 155%. It is possible to see that for several years, the investment loses from the CDI. In the accumulated of eleven years, the result was below 110% of the CDI.
In the same period, Anbima’s multimarket fund index rose by 198%. ARCA would have yielded less than 80% of the average return of multimarket funds in the simulation. Therefore, even with greater risk, ARCA loses to the average of multimarket funds.
Thus, the ARCA strategy is a risky investment that did not prove to be satisfactory compared to the average of multimarket funds and only slightly surpassed simple fixed income.
Michael Viriato is an investment advisor and founding partner of Investor’s House
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