The challenge of Demosthenes Madureira de Pinho Neto, head of Itaú Unibanco’s asset management company, is to overcome the boundaries of being recognised as a Brazilian specialist to consolidate itself as a Latin American expert.
Itaú Unibanco’s main figures are headed to that goal. One example, the $348.2bn total assets, made it one of the largest banks in the Americas. Figures have also helped Itaú Unibanco to obtain important awards that directly reflect how the world’s financial markets and also Itaú Unibanco’s clients recognise its leadership position, such as: Best Brazilian Bank by Euromoney and Global Finance magazines, the country’s best asset manager by Exame magazine and sector leader in Brazil and Latin America by The Banker. This year, the Financial Times voted it the Most Sustainable Bank across Emerging Markets. Besides that, Itaú is also one of the 100 Great Places to Work in Brazil, according to Great Place to Work Institute and Época magazine. Another unique award from Itaú Unibanco is Interbrand’s Most Valuable Brand in Brazil.
Itaú Unibanco Asset Management covers other countries including Chile, Argentina, Uruguay, Paraguay and Mexico. Itaú Unibanco has the largest buyside equity team in Brazil, composed of 10 portfolio managers and 14 analysts who take a fundamental bottom-up approach to optimise long term returns. Asset Management equities’ team covers a 221 investable stock universe. “Our team approach and proprietary research in a region such as Latin America, with growing fast economy and independent domestic level development, enables our clients to live the economic revolution”, points out Walter Mendes, Head of Equities Strategy.
From the Fixed Income perspective, besides high yields due to still high interest rates, Itaú Unibanco has also caught foreign investors’ attention due to the sovereign investment grade. “Brazil is one of the most liquid and sophisticated players in the emerging markets. Our research driven activities, transparent and disciplined investment process and team decision approach form what we consider to be the triad of success: performance, consistency, transparency”, says Ronaldo Patah, Head of Fixed Income Funds.
Recently Itaú Unibanco Asset Management has adhered to the Principles for Responsible Investment, an initiative from an international group of institutional investors reflecting the increasing relevance of ESG issues to investment practices. The process was convened by the UN Secretary General. “The PRI improves our ability to meet commitments to beneficiaries as well as better align our investment activities with the broader interests of society. We have included the PRI into all our investment decisions, selecting opportunities not only in the terms of the expected financial return, but also from the social, environmental and governance perspective. We also expect to influence our clients, partners and employees to consider the principles as an important and necessary role to reach a global sustainability,” indicated Bruno Stein, Head of International Business Development for Asset Management.
With its increasing presence in global markets, Itaú Unibanco has achieved partnerships in four continents. Portfolio investments of foreign investors into Brazilian equities and fixed income markets reached more than $6.7bn this year. From that, Itaú Unibanco had $4.9bn net inflow, calling the world’s attention to its foreign flow attracting capability.
Investor interest
Sum up inflation under control for more than ten years, a stronger currency that maintained stability for almost 10 years and a falling interest rate scenario and you have an amazing macroeconomic history and appeal to investors.
Add the current scenario to the “past history” and you will find out why Brazil has emerged from the global crisis almost intact. An independent and large internal market, unleveraged financial system and a regulated financial sector created the basis for a structure that protected Brazil of being affected by the international crisis.
Liquidity signals are back and a new wave of investments has hit Latin America’s largest economy, and not only from traditional investors. “The typical emerging markets’ investor profile has been increasingly shifted from US and Europe to new financial hubs such as the Middle East as well as Asia, particularly Japan and South Korea,” highlights Marcelo Fatio, Head of Institutional Sales of Itaú Unibanco. Spreading its offices among some of those areas has guaranteed that Itaú Unibanco would be part of this flow. Itaú Securities has offices in New York, London, Tokyo, Hong Kong, and Dubai.
Brazil’s position among other emerging markets has been highlighted. “Itaú Unibanco Asset Management was invited to participate in several RFPs for different strategies’ mandates from endowments, foundations and pension funds around the world” says Stein.
“The fall in interest rates and the new limits, from 50 percent to 70 percent, for local pension funds investment in equities tend to boost a migration to equities from local investment funds that have traditionally parked 85 percent of assets in fixed income. The Bovespa has risen 68 percent in dollar terms this year” says Roberto Nishikawa, Head of Asset Management and distribution for institutional clients. Hedge funds and multi-strategy funds should also benefit from this trend.
“Itaú Unibanco offers a full range of investment management strategies in Brazil such as equities by sector and segments, fixed income, multi-manager through fund of funds and fund of hedge funds, and also hedge funds. Those traditional and boutique products include top shelf products Cayman-based and Luxembourg-based as well as managed accounts where institutional and individual non-Brazilian investors may buy the same products available domestically to Brazilian investors”, adds Paulo Corchaki director and CIO of Itaú Unibanco Asset Management. A top-performing product has been Itaú Unibanco’s fund of hedge funds, which gained more than 26 percent in dollar terms in the first nine months of 2009. The fund, one of the longest-running funds of its kind, was begun in 2005 but built upon research that monitored 100 percent of the 1,000 funds in the country for over a decade. The fund of funds team invests in more than 150 portfolios, and the team also runs an incubator fund of funds for emerging hedge funds managers.
Since 2008, the asset management unit has been receiving a flow of investments for advisory in Latin American products. “We can put together any type of advisory model related to Brazilian investments” complements Stein.
Supported by a strong and rising middle-class, Brazil’s economy is likely to grow at 3.5 percent from 2010 onward, according to the IMF. Reforms and the upcoming sports events to be domiciled in Rio de Janeiro, the World Cup and the Olympic Games, will continue the trend towards Brazil.
For more information + 55 11 3073-3161; Bruno.stein@itau-unibanco.com.br
