Credit-heavy funds see R$49bn in redemptions

Pedro Rudge Leo Pinheiro/Valor In April and May alone, funds with more than 50% of their portfolios in credit assets faced nearly R$49.2 billion in redemptions, data presented by the Brazilian Financial and Capital Markets Association (Anbima) show. Fixed-income funds with at least 10% in corporate debt attracted a combined R$14.4 billion from January to May, under Anbima’s breakdown, reversing the trend from the same period last year, when R$12.6 billion left the segment. Still, the positive result in 2026 was concentrated in the first quarter. Outflows followed, with R$3.3 billion leaving in April and R$24.8 billion in May. The move was driven by portfolios with exposure above 50%, which saw total withdrawals of R$49.2 billion over the two months. Average returns for funds with that level of corporate debt exposure have disappointed since March, when they fell 0.39%. They were virtually flat in April, with a gain of 0.03%, and showed some recovery in May, rising 0.55%. Corporate debt risk Pedro Rudge, a director at Anbima, said the volatility is tied to a high-interest-rate environment. Corporate debt finance companies, which are facing greater difficulty honoring their liabilities or have to borrow at higher costs for a longer period. It is no coincidence, he said, that renegotiations and defaults have increased. “It is somewhat a consequence of the scenario we have been living through in recent years,” Rudge said during a press conference. Brazil posts best dollar flow since 2018 Receivables funds widen financing options for midsize companies Multimarket funds stage comeback with R$18bn inflow He noted that the portfolios are not concentrated in just a few issuers, which partially mitigates the risk that defaults will have a significant impact on fund shares. “Some may have assets that will not perform,” he said. “Corporate debt has risk. It is important for investors to understand that if it offers returns above the CDI [interbank deposit rate], it is because there is risk. It is not a government bond.” Fixed income leads flows Investment funds overall attracted R$184.7 billion in net inflows in the first half of 2026, the second-best flow since 2024, when they brought in R$191.1 billion. In the same period of 2025, slightly more than R$84 billion entered the industry. Fixed income dominated investor attention, with R$108.4 billion in inflows. Structured funds, including receivables investment funds (FIDCs) and private equity funds (FIPs), also performed well, with R$30.6 billion and R$32.1 billion, respectively. Julya Wellisch, a director at Anbima, said foreign investors were largely responsible for the strong fundraising by structured funds, accounting for about 50% of net flows over the past 12 months. In exchange-traded funds, fixed income also prevailed, with R$27.1 billion of the R$32.5 billion raised from January to June. One single portfolio accounted for R$8.9 billion. In all, the ETF segment had R$116.6 billion in assets. The number of ETFs available rose to 202 at the end of June 2026 from 137 in July 2025. Rudge sees ETF growth as a structural trend because these products offer lower costs, transparency, and access to exchange trading, with more asset managers offering the alternative. “There is a sales push happening, making it a product better understood by the market,” he said. Fee-based advice Another factor is the shift in distribution compensation from a transaction-based model to a fee-based structure, in which investors pay a percentage of assets or a fixed fee for advice. Under this model, investment advisers and intermediaries are paid for the overall allocation, not for each product sold. This shift has helped give traction to ETFs. In the commission-based model, front-line professionals and distributors did not encourage investors to include ETFs in portfolios, precisely because of their low costs and because they did not receive rebates for that allocation. Another consequence of this transition is the increase in assets managed through discretionary managed accounts. In a breakdown prepared by Anbima through March, these vehicles had R$1.39 trillion in assets, with about R$800 billion invested in funds. In March alone, net inflows reached R$9.15 billion, Anbima said. “Some factors have led investors to choose managed accounts. Charging a [fixed] fee instead of receiving rebates [in commingled funds and other products] may be one of them, but there is also a tax component,” Rudge said. “Today, investors cannot hold tax-exempt assets in [non-dedicated] funds, and managed accounts end up capturing part of their wealth.” He added that technological advances have allowed managed accounts to become accessible for smaller tickets, helping them gain greater relevance in the market. Asked whether this is another factor draining the fund industry, Rudge said the strategies are complementary. For highly transactional investors, managed accounts may not be worthwhile because taxes are paid more frequently, while in funds the tax is collected at redemption. Funds, however, are subject to the so-called “come-cotas,” the semiannual tax levied on multimarket, fixed-income, and foreign-exchange funds. Multimarket funds keep shrinking Multimarket funds, or multi-asset funds, have been shrinking since December 2022, with assets falling to R$1.54 trillion from R$1.63 trillion and the number of accounts declining to 3.8 million from 5.5 million. Since January, redemptions in the asset class have totaled R$9.9 billion, putting it on track for a fifth year of negative performance. Returns have also disappointed, with an average gain of 3.8% this year. The outflow so far is smaller than in previous first halves. From January to June 2025, the segment saw R$65.2 billion in withdrawals, after redemptions of R$80.2 billion in 2024, R$53 billion in 2023, and R$58.5 billion in 2022. Rudge said that with the Selic base rate at 14.25%, fiscal concerns still high, and elections approaching, investors are unlikely to abandon their conservative stance. “The most likely scenario is that fixed income will remain the main driver of inflows in the coming months. Although the class with more corporate debt suffers somewhat from higher defaults because of the elevated cost (...), funds are diversified to mitigate these systemic impacts,” he said.