Santiago, Chile, will this week receive a visit from Walter Maciel, CEO at AZ Quest, an independent asset management boutique of Brazilian origin which, since April 2015, belongs to the Azimut group. The reason for this visit is simply to explain to Chilean investors why it may now be a good time to re-invest in Brazil. In a road show organized by AZ Andes, Azimut’s Chilean subsidiary, which was established in Santiago in August 2015, Walter Maciel will discuss the long-term opportunities offered by Brazil. In his interview with Funds Society, he reveals some of the keys factors to understanding why now is the right time to invest in Latin America’s largest economy, despite the country’s current economic crisis.
It has been almost one year since Azimut purchased a controlling stake in Quest Investimentos, how has the firm changed? Which products are now offered that were not offered before?
Now at AZ Quest Investimentos, we remain fully independent. Azimut wanted to acquire our expertise in the Brazil and, being an independent asset manager as well, understands the importance of us conducting business as usual, preserving our investment process and retaining our team of professionals, and agreed to preserve that independence as per the contract we signed.
The deal increased our fire power to bring more management capacity, offering other professionals the same conditions pertaining to our deal. Last November we brought Credit Suisse Brazil’s former Credit Head Portfolio Manager and team. In three months we have added a new family of very conservative high grade credit funds and raised close to BRL 500 million.
Your largest funds by asset under management (according to the data available on your website), are the AZ Quest Acoes FIC FIA, the AZ Quest Total Return, and the AZ Quest Yield, would you please explain why have there been more successful than the other ones? Is there any other particular fund that has significantly increased its assets under value?
The credit funds as per the answer above. AZ Quest Acoes is the flagship fund of the long-only all cap family, that includes exclusive mandates for local Institutional Investors and holds around BRL 1 billion of AUM. AZ Quest Acoes has outperformed the Ibovespa Index every single year since inception in June 2005. In 10 years, the fund accumulates 467% net of all fees vs 67% of the Ibovespa.
Do you have any type of interaction with the other Azimut firms in Brasil, AZ Legan and AZ Futurainvest?
We are part of a single project, albeit independent. AZ Futura is now Azimut Brazil WM, a wealth management firm. AZWM is our own distribution arm, offering their individual clients an open platform and with profound knowledge of the Azimut funds (including AZ Quest funds). Our main job is to provide them with a diversified shelf of quality products and their main contribution is to concentrate in our funds and provide us AUM stability.
What is the purpose of this visit to Chile and AZ Andes? Do Chilean Investors have a particular interest for investing in Brazil or any of your funds?
Chilean investors have always had investments in Brazil. Unfortunately, in the last few years the bad economic policies, the greater intervention of state in the macro and sector levels have led Brazil to a major recession and lack of credibility, leading foreign investors, including Chilean, to divest and stay away. We believe this is the perfect time to invest in Brazil.
This past month the real has finally shown a slight recovery against the dollar, as politic turmoil keeps affecting Brazilian economy, are there any signs of improvement?
In the last four recessions in Brazil, since 1980, the investor that was able to enter the market at least three months prior to the inflection of the economy on quarter over quarter basis, made money every single time, in average USD + 60% in 12 months. We believe that inflection will occur by the end of the year.
Furthermore, we believe we are facing the end of both an economic cycle and a political cycle as well. The Brazilian society has changed profoundly. 25 years ago 65% of the people belonged to the informal economy and received transfers from the government. Today, 68% of the people are formalized, holding bank accounts and having access to credit. They pay taxes and demand return of those taxes, decent infra-structure and good public services.
The new cycle will be based on investments and on diminishing the size of the state. There will be a wave of concessions, privatizations, revision of benefits like the social security and no tolerance with corruption on the private or the public sector. We believe the Brazilian investment theme is a long term one.