By Guillermo Parra-Bernal
SAO PAULO Jan 16 Asset managers in Brazil face
a challenging year raising client funds as higher borrowing
costs and a presidential election, alongside the removal of
monetary stimulus in the United States, make investors
skittish, industry group Anbima said Thursday.
Clients are reluctant to pour money into asset management
and hedge funds given the outlook, said Anbima vice president
Robert Van Dijk, although privately-owned pension funds,
government-sponsored funds and private banking clients were
likely to prove an exception.
"Some investors are taking a long-term view, but in general
what you feel is that there is a more conservative tone across
the market," said Van Dijk, also a senior executive at
Votorantim Wealth Management.
Foreign investors, corporate clients and local retail
investors drew some 24 billion reais ($10 billion) from domestic
funds last year, data from the São Paulo-based group showed.
Many investors have been increasingly critical of President
Dilma Rousseff's heavy-handed intervention in some industries
and her reluctance to tackle growing imbalances on fiscal and
Net fundraising totaled 59.7 billion reais last year, the
lowest number in five years and below the historical average
since at least 2007, Anbima said. In 2012, funds attracted a net
103.1 billion reais.
The numbers provide fresh evidence of the impact on investor
perceptions of declining monetary stimulus in the U.S. and a
deterioration in Brazil's fiscal position.
Brazil has the world's seventh-largest fund industry, with
2.47 trillion reais - about $1.1 trillion - of assets under
In terms of asset classes, fixed-income and hedge funds saw
the largest redemptions last year.
Executives at Anbima would not detail expected asset class
performance this year, but said clients would remain attentive
to political risk and global market trends when deciding what to
do with their money.
October's election, in which Rousseff is expected to seek a
second term, is a concern for investors. Polls show Rousseff
would beat any challenger if the elections were held today.
In 2013, investors boosted demand for more liquid assets, or
financial instruments that can change hands faster, while
cutting their share of stocks and government debt in overall
portfolios, Anbima said.
Outstanding securities linked to repurchase agreements rose
to 25.4 percent of total assets under management in Brazil, up
from 22.3 percent in 2012.
The amount of government debt holdings fell to 35.6 percent
of the total from 39.5 percent in 2012, following a steep jump
in debt yields as the central bank raised the benchmark Selic
overnight lending rate six times last year.
The central bank raised the Selic by a higher-than-expected
0.5 percentage points to 10.5 percent on Wednesday.
Market turmoil led to a dramatic spike in government bond
yields between the first- and third-quarters of last year,
fueling huge losses for some securities - especially fixed-rate
and inflation-linked bonds with long maturities.
Part of that impact may have reduced the share of government
debt in total holdings, said Luiz Sorge, a director at Anbima.
Stocks fell to 13.7 percent of total AUM in 2013, from 14.1
percent the prior year, following a tumble in the Bovespa
benchmark stock index.
Equity holdings in Brazil are well below the global fund
industry's 43 percent reading, Sorge said.
The share of investments in corporate credit instruments
rose to 11 percent last year from 9.7 percent in 2012. Asset
managers are moving into that category, including asset-backed
securities and credit investments, to chase higher returns.