LatinFinance - May/June 2015 - 22

though the short duration of the paper
means they change on a daily basis.
The challenge of tracking the benchmark
is compounded by the fact that the fund
has withdrawals on a daily basis, while
management fees and other administrative
expenses put pressure on a product that
focus on a narrow universe of assets, says
Emilio Carvalhais, head of the short term
fixed income division at BB Gestão de
Ativos.
"Usually we employ a passive
management strategy, but in some
circumstances we can use some active
elements as well," Carvalhais says. "For
example, we may want to add some
duration or shorten it, to take advantage
of the interest rate curve and achieve extra
alpha."
The short duration of the benchmark
provides an advantage over long-term
funds when it comes to marking to market
any changes in the interest rate curve - not
a particularly rare occurrence in Brazil. All
things considered, Carvalhais says the fund
has done well by keeping very close to the
benchmark in the past year or so.
Beating the Ibovespa
Accelerating inflation and high interest
rates may have helped some families of
fixed income funds, but it made life more

JOSÉ ZITELMANN, BTG PACTUAL

"OUR PRIORITY IS TO
INVEST IN PREMIUM
COMPANIES THAT ARE
LEADERS IN THEIR
SECTORS - AND NOT
ON THOSE THAT MAY
LOOK CHEAP, BUT
WHOSE MANAGEMENT
DOES NOT HAVE THE
SAME QUALITY"

difficult for equities managers. Those
factors were exacerbated by the fact that
capital flows which once boosted the
Bovespa have been moving in the opposite
direction, in anticipation of the US Federal
Reserve's much-awaited reversal of
monetary policy.
The recent performance of the Ibovespa
index illustrates the challenges faced by
the managers of equity funds in Brazil.
After reaching a peak of almost 73,000

points in 2010, the index dropped to as low
as 44,000 in 2014, and hovered close to
56,000 points at the end of April.
Sectors of the economy that delivered
stellar performances a few years ago,
such as retail or oil and gas, are doing
much worse these days, affected by
sagging consumption, low oil prices
and a corruption investigation on an
unprecedented scale at Petrobras.
Fund managers say the secret to
delivering results that can not only
overcome such hurdles but also rival
the performance of other asset classes
is a strong focus on quality stocks with
attractive valuations - rather than purely
cheap ones.
One example is the BTG Pactual Absoluto
FIC FIA fund. Its point of difference is that
it restricts its number of large holdings to a
few stocks that match a number of stringent
criteria set by its managers. As a result, as
few as ten companies comprise around
70%-80% of the fund's portfolio.
"Our priority is to invest in premium
companies that are leaders in their sectors
- and not on those that may look cheap,
but whose management does not have the
same quality," says José Zitelmann, head of
equities in BTG Pactual's asset management
division. "We only invest in companies
whose history we know, and whose

Inflation-linkers at the top
LatinFinance 2015 Brazilian Debt Investor Scorecard
Average assets ($m) 12
months to April 2015

Fund Manager

Fund Name

1-year return (%)

3-year return (%)

BB Dtvm

Prev Idka 2

1,141.03

12.7

34

Santander Brasil

FICFI Ima B 5 Tit Publ

138.65

12.9

33.8

Caixa

FI Caixa Brasil Ima B 5 Tp

946.21

12.9

33.7

Gerval

Fig FI Cred Priv

222.61

12.3

34.1

Votorantim Asset

FI Allocation Inflação

232.14

12.9

33.5

Average assets ($m) 12
months to April 2015

1-year return (%)

3-year return (%)

150.76

52.2

137.5

Source: Economatica. Data to April 15, 2015

What index?
LatinFinance 2015 Brazilian Equity Investor Scorecard
Fund manager

Fund

Bradesco Asset
Management

FIA Bdr Nivel I

BB Dtvm

Ações Cielo FI

115.26

35.9

131.4

Atmos Capital

Ações FIC de FIA

231.18

28.5

71.1

BTG Pactual

Absoluto FIC FIA

297.85

24.9

55.4

Nucleo Capital

Ações FIC de FIA

140.13

19.3

58.8

Source: Economatica. Data to April 15, 2015

22 L ATINFINA NCE.COM - May/June 2015


http://www.LATINFINANCE.COM

LatinFinance - May/June 2015

Table of Contents for the Digital Edition of LatinFinance - May/June 2015

Contents
LatinFinance - May/June 2015 - Cover1
LatinFinance - May/June 2015 - Cover2
LatinFinance - May/June 2015 - Contents
LatinFinance - May/June 2015 - 2
LatinFinance - May/June 2015 - 3
LatinFinance - May/June 2015 - 4
LatinFinance - May/June 2015 - 5
LatinFinance - May/June 2015 - 6
LatinFinance - May/June 2015 - 7
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