09/10/2024 – 7:23
First Trust, an American manager that operates in Brazil in partnership with HMC, announced this Wednesday, the 9th, the launch of six new ETF BDRs on B3, with Nasdaq as the index provider. The products are available to qualified investors, but the range should soon open up to general investors. Now, First Trust has 23 BDRs listed in Brazil, after the first wave, launched in 2021.
“Our plan is to bring in around 20 new ETF BDRs this year, and we decided to do this in parts, based on prioritization and to facilitate some operational requirements. We are very happy with this new tranche of BDRs as they are some of the strategies that there is definitely more interest in across the region”, said April Reppy Suydam, leader of First Trust in Latin America, in an interview with Broadcast Investments.
The new strategies brought by the manager look especially at the corporate market small and middle capsin addition to the electrical infrastructure and technology segment.
“Last year was the most ‘concentrated’ stock market we have ever experienced in the United States, and it is difficult to maintain such a tight concentration. We are not speaking against the big names, against the ‘Magnificent Seven’ or great opportunities for technological growth. But we entered this year strongly convinced that it would be prudent to diversify portfolios to capture a broader market”, says Suydam.
For her, First Trust’s products offer solutions that “go beyond the traditional market”, which is the case with theses with companies small and middle caps. “There are a lot of people super focused on large capsbut there is opportunity for diversification. And not thinking about the broad indexes, which are just buying companies that meet the qualifications of what a small or mid-cap company is. We look for the most profitable ones”, he highlights.
According to Suydam, First Trust is still “feeling” the interests and needs of Brazilian investors for exposure abroad. “The majority of Brazilians still do not take advantage of the advantages and opportunities offered by BDRs”, says the executive, who is keeping an eye mainly on institutional investors – such as equity allocators and multimarket funds.
First Trust’s products are not yet available to the general investor, but Suydam says this should happen “soon.” “Some institutional clients need the product to be available in the ‘retail’ classification for their customers. And it has been interesting to follow their interest in increasing this percentage of BDRs in the portfolio”, he says.
Despite the headwind that the attractiveness of Brazilian fixed income represents for investments abroad, Suydam assesses that there is a growing understanding that international diversification is an opportunity that cannot be ignored. “It’s a bit of FOMO (acronym for fear of missing out). The year was incredible for the American market, with powerful returns, and Brazilian investors are afraid of ‘missing out’”, says the executive.
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