The Ibovespa (IBOV) has fallen 8.7 percent this year, putting Brazil’s benchmark stock index on course for a second year of losses. That could further drive some investors away from small firms to better-established names, said Alvaro Bandeira, a partner who helps oversee 250 million reais at Rio de Janeiro-based Orama. Of 373 equity funds with at least $37 million in assets, 78 percent beat the Ibovespa this year, offering an average return of 2.5 percent, according to data compiled by Bloomberg. That compares with an average return of 1.8 percent in the same period among the 307 funds that manage from $18.6 million to $27 million, of which 71 percent beat Brazil’s benchmark stock index.
“Brazilian investors never really had the habit of searching for managers and for lower fees,” Michael Viriato, head of the financial sector department at Sao Paulo business school Insper, said in a phone interview from Sao Paulo. “They just put their money in the funds that are suggested by the managers of their banking accounts where they receive their salaries. Big banks are seen as reliable.”