New option in fixed income, FIDCs have an advantage in high interest rates; understand

In a year in which fixed income should again play a leading role in investors’ portfolios, compared to the high level of 13.75% of the basic interest rate, investors will now have a new alternative to allocate resources in the asset.

At the end of December, the CVM (Comissão de Valores Mobiliários) published the new regulatory framework for investment funds, which takes effect in April and now allows the offer of FIDCs (investment funds in credit rights) to investors in general .

Until then, these investment vehicles, due to their degree of complexity, were only available to investors considered qualified or professional by market legislation, which are those with at least R$1 million and R$10 million in financial investments, respectively.

Managing partner of Solis Investimentos, a resource manager specializing in FIDCs with approximately R$ 11.5 billion, Ricardo Binelli explains that receivables funds are structures that invest in debt securities receivable from a given company, roles known in the jargon market as receivables.

Binelli cites a practical example to facilitate understanding: in mid-2019, São Paulo Futebol Clube structured an FIDC in which the Morumbi club sold part of the amounts it would be entitled to receive from the pay-per-view contract with the club to investors. Rede Globo for the transmission of its matches in the Brazilian championship.

According to the Solis specialist, when negotiating credit rights, managers buy securities that give them the right to receive amounts in the future at a discount rate. In this way, receiving the full amount of the payment later is what provides the return to investors.

Among the investments in FIDCs made by the manager, he points out cases of payroll loans from federal public servants, student loans aimed at professional courses and origination of installment loans carried out by fintechs to small and medium-sized companies, in which Solis acquires the right to receive the amounts due in the future with a discount in order to remunerate the investors.

The expected return on FIDCs, on average, revolves around the CDI plus a rate of between 3% and 4% per year, in the case of so-called senior shares, says the expert.

He explains that FIDCs are structured with different quotas, the most common being senior and subordinate. The subordinates, which usually correspond to a portion between 20% and 30% of the total value of the fund, are the ones that are first affected in case of default. Only if the default exceeds the percentage allocated to subordinates does it also affect the senior quotas.

In order to protect individual retail investors who will be able to invest in FIDCs, the rule imposed by the CVM allows this public to invest only in senior shares.

“The senior quota has a structure of risk versus return more appropriate to the profile of the general public”, says Nathalie Vidual, acting superintendent of securitization and agribusiness at the CVM. She adds that the risk level of FIDCs, in the case of the senior quota, corresponds to the profile and level of financial education of the general public.

According to her, an important objective on the autarchy’s agenda is the empowerment of retailers. “Part of that purpose is to make more products available to common investors, especially those that can generate greater diversification of their investments, such as alternative structured funds”, says Nathalie.

CEO of Empírica Investimentos, Leonardo Calixto says that, given the complexity involved in the structure of FIDCs, the products that the manager launches for the general public should be in the form of a fund that buys shares in other FIDCs.

Thus, the house’s professionals make a prior curation of risk funds compatible with the profile of retail investors, says the CEO of Empírica, a manager focused on FIDCs with around R$ 9 billion.

“I have no doubt that FIDC quotas are excellent alternatives to compose investors’ equity, and the regulatory framework has increased access, but there are difficulties in relation to the analysis, selection and monitoring of these funds”, says Calixto.

“There is a natural learning process both on the side of the investor and on the side of the service providers in properly communicating with this new public, expanding financial education”, says Nathalie, from the CVM.

Binelli, from Solis, adds that most FIDCs on the market are in the closed format, in which the investor invests the money and has to wait for the fund’s lifetime to get the money back.

He says that, in general, FIDCs usually have an average term of 36 months, the first 12 of which are grace period, in which managers seek investments for the portfolio, and, in the remaining 24, is when the investor starts to receive the amounts divided and corrected.

What are FIDCs?

FIDCs (credit rights investment funds) are fixed-income funds that buy receivables from a given company, known in market jargon as receivables. Debt purchases are made at a discount by managers, as they assume the risk of future receipts, and the payment of the full amount is what generates the return to investors.

What is the expected return?

The profitability of FIDCs varies according to each fund, but, on average, it fluctuates around the CDI plus 3% to 4% per year, in the case of senior quotas, according to estimates by Ricardo Binelli, from Solis Investimentos.

When is the deadline?

FIDCs usually have a term of 36 months, on average, with the first 12 of grace, in which managers seek investments for the portfolio, and, in the remaining 24, is when the investor starts to receive the amounts in installments and corrected.

When will FIDCs be offered to the general public?

The managers specializing in FIDCs work on the necessary adjustments of the funds in the product range to start offering them to the general public as of April, when the new regulatory framework for CVM funds comes into force. Until then, the products could only be offered to investors considered qualified or professional by market legislation, which are those with at least R$ 1 million and R$ 10 million in financial investments, respectively.