Brazil: Investment Funds Industry

The Brazilian Investment Funds Industry

The investment funds industry in Brazil is regulated by Law No. 4728/65, which establishes the essential structure of requirements for listing, reimbursement of investors, tariffs and administrational practices. The responsibility for the supervision and discipline of all the funds originally fell to Brazilian Central Bank. But once the CVM was created the latter took over the duties of regulating the funds containing assets yielding variable returns, while the bank retained responsibility for the funds yielding fixed returns. The various categories of investment funds are currently regulated through the Resolutions of the National Monetary Council and disciplined through Circulars issued by the Central Bank and Directives from the CVM.

There are currently 37 different types of mechanisms for collective investment, with 30 of these being directed towards resident investors and seven towards foreign investors. The CVM supervises a total of 20 different funds and the Central Bank is responsible for the control of the 17 others. Of these, 15 present significant volumes of capitalization, 12 being

destined for domestic investors and three towards overseas investors. The main types of funds for residents are: Investment Funds in Shares, Investment Funds - Free Portfolio, Financial Investment Funds - 60 days; Financial Investment Funds - 30 days, and Short-Term Investment Funds. Those for foreign investors are: Fixed Income Funds, Privatization Funds, Conversion Funds and the mechanism contained in Supplement IV.

The investment funds industry in Brazil is responsible for assets of some US$85.1 billion, representing 13.5% of the GDP. The following table represents the evolution of assets within the system since 1991:

Total Assets of Investment Funds (US$ millions)
Year Total assets % of GDP
1991 10,227.6 1.8
1992 21,208.2 3.9
1993 37,225.3 6.5
1994 83,456.4 13.7
1995 85,147.5 13.5

 

 

 

 

Source: ANBID, the CVM and Gazeta Mercantil