In a scenario of high interest rates that attracted investor demand for fixed income, one of the largest asset managers in the market on a global scale, BlackRock saw the volume of assets in the Brazilian market drop dramatically in the local market in recent months.
The equity of ETF BDRs, instruments traded on the Brazilian stock exchange through which investors are able to expose themselves to assets abroad without having to send the money out of the country, reached BRL 2.7 billion in November 2022, against about of BRL 5.4 billion at the end of 2021, a decrease of approximately 50%.
“With the Selic almost at 14%, these redemptions were common in the investment industry as a whole”, said Karina Saade, executive responsible for BlackRock’s operations in Brazil, during a meeting with journalists this Wednesday (30) in São Paulo.
She believes that, for investors to return to seeking more risk for portfolio investments, it is necessary for the Selic rate to retreat, in order to reduce the appeal of returns on low-risk investments in fixed income.
“For us to see more volume in the fund industry and in BDRs as a whole, we need to see the interest rate come down. We believe that this will be the case, that it will not remain so high forever, but the timing of this is uncertain ,” Karina said.
The executive estimates that the basic interest rate needs to fall to a level below 10% for higher risk investments to attract the attention of investors again.
“While the Selic is high, the propensity to take risk is low.”
Manager believes that Brazil can become a protagonist in the ESG agenda with political change
The BlackRock executive also said that, with a change in the priority of the Brazilian government from 2023 in relation to environmental policy, the country and the local market have the potential to become an important destination for investors who adopt the ESG (good environmental practices , social and governance) in their investment policies.
“Brazil has great potential to be a protagonist in this agenda [ESG] and being the biggest destination for foreign investment, because we stand out in several areas of sustainability and having a clearer global narrative, we can attract more foreign investment in sustainable Brazilian assets”, said the executive.
“I think this could change significantly [com o resultado das eleições]🇧🇷
BlackRock recently closed a global ESG-focused fund, BSF Style Advantage Screened, due to low investor demand. THE Sheet found that the practice of closing down products is something regular within the manager’s business, with the focus on ESG not having been relevant to the decision. The product was not offered in the Brazilian market.
In any case, a survey by the financial data platform TradeMap shows that ESG funds in the Brazilian market have also seen a significant drop in demand from investors in recent months, in the wake of an increase in the attractiveness of local fixed income.
Platform data indicate that the base of assets under management of ESG funds in the country fell from BRL 10.3 billion in December 2012 to BRL 7 billion in November this year, a drop of 32%. The shareholder base of these funds went from 100.9 thousand to 61.3 thousand, down 39.2%.
“BlackRock believes with great conviction that the demand for ESG is a structural demand, it will continue to grow, but obviously it is not linear”, stated the manager’s executive.
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