BlackRock Brazil announced the launch of two new ETFs at a meeting with journalists. This move comes after an 11-year hiatus without new products. Under the leadership of Bruno Barino, who assumed the role of CEO in October of last year, the manager announced new strategies for Brazil and new products.
According to Barino, they are based on a global trend. “We began to complement our network. Today we have BOVA11, the most liquid ETF in Brazil. It is a historic success, with a volume of 11 billion reais (around $2 billion). Now we see an evolution in the ETF market and we want to support this transition in Brazil,” he stated.
One of the ETFs, EWBZ11, focuses on equal weighting: “If there are, for example, one hundred stocks, each will have 1%. This already exists in relation to the S&P and now also in relation to the Ibovespa,” he indicated.
The product will replicate the Bovespa BR+ Equal Weight B3 Index, which includes the Ibovespa assets and BDRs of Brazilian companies listed abroad, with an equal weighting among issuers. “This provides greater balance among the companies in the portfolio and dilutes the weighting of companies with the highest market value,” the manager stated.
“Some clients do not want the same concentration of companies in the exchange. In this case, we observe a different treatment of the index,” he commented about the new product.
The other ETF, CAPE11, has a CAP5 strategy, which limits the maximum weighting of any stock to 5% of the index. This means that, even if a company has a high market value, its share in the index will not exceed this limit.
The fund replicates the Bovespa BR+ 5% Cap B3 Index, which also includes Ibovespa stocks and BDRs of Brazilian companies listed internationally, but with a maximum limit of 5% per issuer. “We take the surplus from the largest companies and distribute it at the end,” he said.
Barino commented that the new products have had “much more acceptance than expected. We conducted a roadshow with assets and pension funds, and the acceptance is much greater than I imagined. I have seen that Brazilian investors are maturing regarding this product. Now we are evolving.”
Advisory, Family Offices, and MFOs
BlackRock Brazil has also established a new advisory area for project development. Barino cites as an example the manager’s participation in Saudi Arabia’s Vision 2030 plan, whose objective is to develop the local economy. There, the manager works with the Public Investment Fund on a $5 billion investment platform to develop capital markets.
“How do you design a project? How do you make it attractive? (…) This is a trend I am bringing to Brazil and I hope to see results soon,” he stated.
In addition, according to Barino, BlackRock has also been working with single-family and multi-family offices.
“Before, we focused only on products, but now we focus on understanding each one’s operating model. There are players with a level of sophistication equivalent to a bank treasury department. Others have only two or three people. Therefore, we are close to selling solutions,” he noted regarding this.
