Through Manaca, clients have access to a broad portfolio of investment products selected by BTG Pactual under open architecture structure and rigid selection process of issuers and managers, aiming diversity, performance and reliability.
“Tesouro Direto” government debt is issued by the Brazil Treasury to finance government spending as an alternative to taxation. These types of securities are popular and well-known in the market and recommended for beginners and risk averse investors.
1a) Floating rate of return
The securities called “Tesouro Selic” and “Tesouro IPCA+” have a floating rate of return, the first indexed to the interest rate (Selic) and the latter to inflation.
1b) Pre-fixed rate of return
The “Tesouro Prefixado” is the only debt security from Brazil Treasury that has its rate of return 100% pre-determined by the time of the investment execution. In other words, the investor knows from the beginning the interest amount that will be added to the original amount (principal) by the end of the agreed term.
A mutual fund is an open-end professionally managed investment fund that pools money from many investors to purchase securities.
Among the advantages of mutual funds when compared to direct investing in individual securities are economies of scale, diversification, liquidity and professional management.
Mutual funds are often classified by their investment strategy and underlying assets: fixed income funds, equity funds and “multimercado” hedge funds or other.
2a) Fixed Income Funds
Fixed income funds are simply mutual funds that own fixed income securities such as Treasury securities, corporate debt securities and CDs from banks among others usually regarded as low risk securities by the fund manager.
2b) “Multimercado” Hedge Funds
A “multimercado” fund is an investment fund that makes use of more complex trading, portfolio-construction and risk management techniques to improve performance, such as short selling, leverage, and derivatives. The “multimercado” fund usually has a broader investment policy enabling the fund manager to allocate funds into multiple markets, including interest, foreign exchange, equity and even international assets. Due to its higher investment flexibility, in essence, one also can expect that it generates higher volatility and so it is of ultimate importance that the investor is fully aware of the fund risks.
2c) Equity Funds
An equity fund is a mutual fund that invests primarily in stocks. It can be actively or passively (index fund) managed. Equity funds could be also known as stock funds. There are a few strategies included in the Equity Fund category such as Equity Hedge and Long Bias among others.
2d) Foreign Exchange Funds
The foreign exchange funds have its invested assets indexed to foreign currencies, usually United States dollar (USD) and/or Euro (EUR). These funds’ objectives are to protect capital against currency exchange fluctuations, utilizing derivatives and swaps.
Fixed income (debt) securities are recommended for investors who are seeking lower level of volatility in their expected returns. In other words, higher certainty over the interest amount to be gained. The vast majority of this kind of security is represented by CDs, “LCI” which is real estate originated and “LCA” that is agriculture related.
There are three different types of to return rates (indexes) for fixed income products:
I) floating rates, usually indexed to interest rate (Selic) or to local Brazilian libor (CDI),
II) pre-fixed rate of return, agreed return rate and time horizon by the time of the investment execution.
III) inflation, usually IPCA that is an inflation index plus a premium.
An equity investment is money that is invested in a company by purchasing shares of that company in the stock market. These shares are typically traded on a stock exchange, in Brazil they are traded at B3 (former BM&F Bovespa).
The main products included in the Equity are:
Equity investors purchase shares of a company with the expectation that they’ll rise in value in the form of capital gains, and/or generate capital dividends. If an equity investment rises in value, the investor would receive the monetary difference if they sold their shares.
Options are financial instruments that are derivatives based on the value of underlying securities such as stocks. An options contract offers the buyer the opportunity to buy or sell—depending on the type of contract they hold—the underlying asset.
Call options allow the holder to buy the asset at a stated price within a specific timeframe. Put options allow the holder to sell the asset at a stated price within a specific timeframe.
Each option contract will have a specific expiration date by which the holder must exercise their option. The stated price on an option is known as the strike price.
4c) Real Estate Funds
Futures are derivative financial contracts obligating the buyer to purchase an asset or the seller to sell an asset at a predetermined future date and set price. A futures contract allows an investor to speculate on the direction of a security, commodity, or financial instrument.
COE (Certificado de Operações Estruturadas) means Certificate of Strucutured Operations. It is a type of investment that bundles fixed income and equity features in a way that the investor’ principal amount could be partially or fully protected against a range of markets offsets. In other words, the investment combines the low risk of a fixed income instrument together with the upsides of an equity investment. It is so a hybrid product with a determined time horizon. Its has been very popular in an era of low interest rates.