Market roundup: Brazilian real estate investment funds boom

Brazilian real estate investment funds take a new upward trajectory

Some of the largest managers of real estate investment funds (FIIs) in the country — XP, Vinci, HS, and Hedge — are said to be increasing their exposure to shopping center assets as the sector appears to have recovered from the pandemic and is well positioned to take advantage of the new cycle of interest rate cuts set to start in August. The segment is opening up a new upward trajectory for FIIs.

State of play. After amassing almost 5 percent in losses at the beginning of the year, the IFIX — the index of the most traded FIIs in the Brazilian stock exchange — now accumulates over 11 percent year-to-date growth, growing above the country’s benchmark stock index and reaching the highest level since January 2020. 

• More importantly, shopping mall funds on the IFIX grew 18 percent on average in the first half of 2023. In 12 months, shopping mall funds in general (not only the ones on the IFIX) boast gains of 29.79 percent, more than double the IFIX return itself in the period (12.87 percent), as shown by data from TRX Investimentos.

Why it matters. The number of individuals investing in FIIs reached 2.2 million in June, according to data from the Brazilian stock exchange. In the same month, the total equity of listed funds reached a record BRL 260.2 billion, according to Brazilian capital market association Anbima. 

• Experts believe this industry could double in size in the medium term, reaching 4 million individual investors in five years.

History. FIIs were created by...