Brazil gets its first fixed income ETF with new Mirae launch

Sep 11th, 2018 | By | Category: Fixed Income

Mirae Asset Global Investments has launched the Mirae Asset Renda Fixa Pré Fundo de Índice (FIXA11 BZ) on B3, Brazil’s main stock exchange located in Sao Paulo.

Brazil gets its first fixed income ETF with new Mirae launch

Brazil has got its first fixed income ETF with the launch of the Mirae product on B3.

The fund, which provides exposure to Brazil’s inter-bank interest rate, becomes the first fixed income ETF to list in the country.

The South Korea-headquartered asset management firm will be hoping to tap into Brazil’s significant appetite for bond investments. According to local capital markets association Anbima, fixed income strategies make up almost half of the country’s $1 trillion fund industry.

Mirae has partnered with S&P Dow Jones Indices for the landmark launch, with the fund tracking its S&P/B3 Fixed Income Index.

The index replicates the return from a hypothetical portfolio holding a three-year futures contract on the country’s one-day inter-bank rate.

The Brazil Interbank Offered Rate, or BRAZIBOR, is currently 6.5%.

The underlying futures contract are rolled semi-annually in June and December over a one-day rolling period.

Felipe Paiva, B3’s Customer Relationship Brazil director, commented, “The fixed income ETF will contribute even more to our challenge of consolidating financial education in Brazil.”

He noted that the launch of the product will bring a number of benefits to Brazilian investors, such as low minimum investment, enhanced liquidity, and transparency.

“We must continue to put forward a development agenda for the Brazilian market, and with the fixed income ETF, Brazil will be in line with the investment platforms of the main financial and capital markets industries worldwide,” added Paiva.

Other investment firms in the country have shown interest in launching fixed income ETFs.

Itaú Asset Management is scheduled to list a fund early in 2019 following its successful bid to the country’s Treasury department. The ETF will be launched with the government’s support and track an index of local government bonds.

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