SAO PAULO, Dec 8 (Reuters) - Rising borrowing costs in Brazil are helping prop up returns for domestic asset managers, allowing them to raise more money from clients in a challenging year, an industry group said on Monday.
The central bank’s decision to increase the benchmark Selic overnight lending rate over the past couple of months is bolstering returns this year, versus the same period a year earlier, said Carlos Massaru, a vice president at Anbima, the group representing Brazilian asset managers and investment banks.
In the first 11 months, returns climbed for overnight fixed-income, fixed-income and index-linked notes, while those for stocks and funds tied to dividends declined. Returns among hedge funds had mixed performance, Anbima said in a report.
The expected cycle of increases in the Selic to head off inflation as well as speculation that incoming Finance Minister Joaquim Levy could tighten government finances should be supportive of demand for short-term fixed income instruments, Massaru said. The central bank, which raised the Selic by a half-point last week to 11.75 percent, may raise it to about 12.50 percent by June, some economists said.
“With the Selic at these levels, the preference for these assets makes all sense from the risk and return standpoint,” Massaru said, referring to the growing share of repurchase agreements and other short-term assets among funds.
Accumulated returns on products linked to the DI (Deposito Interbancario) interest rate futures curve rose to 9.9 percent in the year through November, compared with 7.4 percent in the same period a year earlier. Returns on inflation-and other index-linked notes hit 13 percent this year, compared with a decline of 4.5 percent a year earlier.
Anbima expects Levy’s team to resume a discussion next year to end a tax called “come-cotas” that is charged twice a year on investments. (Reporting by Guillermo Parra-Bernal; Editing by Jeffrey Benkoe)