Asset management: Brazil reviews its pension arrangements
Brazil is a big financial market with lots to manage and plenty of challenges. New investment rules offer broader opportunities. International investors are starting to see the potential too. Rob Dwyer reports.
IN EARLY 2010 Brazil’s Bradesco Asset Management began to solidify its strategy to attract international capital into its managed funds. Tentative soundings of the market in the previous two years had been encouraging, says company chief Denise Pavarina, so about 12 months ago the marketing efforts began in earnest.
The focus began in Japan, where Bradesco has a partnership with Mitsubishi UFJ Financial Group. One year later these plans had to accommodate the speed bumps of the withdrawal of funds from emerging markets globally, the sideways performance of Brazil’s Bovespa and the increase of the IOF international tax on Brazilian fixed-income investments to 6% in October 2010. (The IOF remains at 2% for equity.) There was also the Japanese earthquake. Despite these obstacles Bradesco grew its assets from Japanese investors to $2 billion from $300 million.
In April, Pedro Bastos, chief executive of HSBC Global Asset Management Latin America, spent three weeks in India. One of the main reasons for the trip was to market the launch of two Brazilian funds. He acknowledges that there have recently been problems raising new funds but remains upbeat about the prospects for growth. "It is a volatile market in terms of assets under management because you get periods like the past six months with the migration back to the developed markets, so the flow of funds to Brazil has not been what we expected," he says.