Lower interest rates boost allocation to riskier classes

The investment fund industry ended September with net capital inflow of R$28.1 billion, raising the year-to-date positive balance to R$205.7 billion, a 180% increase from a year earlier. Rates at a record low and prospects of additional Selic cuts later this year are fueling the good run, especially in those classes seeking returns on riskier assets.


The Balanced-Mixed class drew R$9.7 billion of new funds in the month, raising between January and September R$56 billion, the largest amount among fund classes. The Free and Foreign Investment types stand out this year, with net inflow of R$29.1 billion and R$14.8 billion, respectively.

The Equity class has the second-largest net inflow, both in September and year to date*, having raised R$7.5 billion and R$47.7 billion, respectively. Alone, the Equity - Free Portfolio type, the most representative in the class, accounted for 59% (R$28.2 billion) of inflows since January.

The other classes also mirror the fund industry’s good momentum. The Pension Fund class showed net inflow of R$2.6 billion in September and of R$26 billion this year. Even the class that in theory would be the most impacted by lower interest rates, the Fixed Income, raised R$2.2 billion in September, with a year-to-date inflow of R$13.1 billion. That compares with net redemption of R$2.1 billion in the same period of 2018.


Prospects of additional cuts in policy rate Selic had a positive impact on returns of Brazilian assets. All ANBIMA types ended the month with positive returns. The type with the largest assets in the Equity class, the Free Portfolio, gained 2.15%. Within the Balanced-Mixed class, the Free type yielded 0.91% September. In the Fixed Income class, the Indexed type offered the highest return (1.84%).

*The Credit Receivables class had the second-largest inflow year to date at R$48.4 billion, but that was concentrated in only one fund, not reflecting a structural movement of the segment.