Boletim de Fundos de Investimentos

Fixed income, balanced/mixed funds show highest net inflow in 2017

The fund industry’s record net inflow through October 2017 -- R$242.5 billion -- reinforces the positive trajectory of the segment this year, especially in the fixed income and balanced/mixed classes, which accounted for the highest amounts in the period, of R$92.2 billion and R$87.7 billion, respectively. Among the types of funds with the best performance, the highlights are the fixed income - short duration/investment grade, with R$30.2 billion raised, and the balanced/mixed - macro, with R$29.1 billion.

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The October figures improved over the previous month, with net inflow totaling R$14.2 billion compared with R$4.3 billion in September. However, the October level is below the monthly average of R$25.4 billion (January through September), which reinforces the possibility of a smaller amount raised in the second half, a period marked by a decline due to seasonal factors, as mentioned in the October Report. Among fixed-income funds, short duration and free duration/investment grade had the best performance, raising R$4.4 billion and R$3.2 billion, respectively. As for balanced/mixed funds, the macro type raised R$3.9 billion, the highest amount in this class.

The allocation of individuals’ funds has been influencing the fund industry’s fundraising profile. This movement is in line with declining household indebtedness seen this year (to 41.6% in August 2017 from 43% in August 2016). The performance of retail (including high income) and private segments accounts for a large part of the net inflow from fixed-income and balanced/mixed classes. Of the R$89.6 billion raised by fixed-income funds this year through September, retail investors accounted for R$59.3 billion while the private segment raised R$16 billion. In the balanced/mixed funds, which raised R$80.3 billion in the same period, the private segment was responsible for R$44.4 billion, while the amount raised by retail investors totaled R$10.5 billion. It is worth noting that retail participation is becoming relevant among balanced/mixed funds, indicating these investors are increasing their exposure to risk, and also an improvement in the distribution channel of these products in the industry, which is able to respond to changes to investor strategies.

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Among the most representative types, the equity - value/growth funds have been leading returns year to date, with a 27.15% gain through October. With the same trend, the equity - free portfolio fund posted a 25.69% return, although its monthly performance (0.11%) was well below September’s, at 4.85%. Another highlight is the performance of the equity - small caps fund, yielding 38.96% this year. Other classes also stand out, such as fixed income - short duration/investment grade and balanced/mixed - macro funds, with cumulative returns of 8.94% and 12.57%, respectively.

In the coming months, the return-seeking scenario is likely to be more challenging for the fund industry due to the near end of the monetary-easing cycle (see the Fixed Income Report), which will require a fine tuning in the portfolio management in order to adjust the risk-return ratio amid an environment which, according to forecasts, may show stable interest rates over a considerable period in 2018.