The incorporation planned for the FII will bring advantages to shareholders and positions the fund among the five best to invest in this month
In September, the real estate fund market was surprised by the news that the largest FII of the FoF type (fund of funds) in the country will be liquidated. The statement came after its shareholders approved the incorporation of the asset by another real estate fund, the BTG Pactual Real Estate Hedge Fund (BTHF11)operated by the same manager.
However, there is a good reason behind this movement: to increase investment possibilities, as hedge funds give shareholders the possibility of investing in FII shares, but also in real estate credit, real estate and shares in companies in the sector.
Until now, FoF had stood out in paying good dividends and was a “stamp” in Empiricus’ monthly FII portfolio – it was even recommended for September.
Even if FoF ceases to exist in the near future, the house assesses that It's still a great deal continue investing in it.
This is because the incorporation of the asset can bring a series of benefits to current FoF investors. Check out what they are:
The best of both worlds
The merger between FoF and the hedge fund will be carried out with the issuance of shares from one to the other, with 100% of the issued shares going to their original owners. Thus, shareholders will still be able to enjoy good returns and discounts in relation to the asset value, a strong characteristic of FoF. Additionally, there are other benefits such as:
- Update of the portfolio's asset portfolio;
- Possibility of closing a discount on the market share in relation to the equity share;
- Projection of increased income;
- Greater flexibility in regulations for management activities;
- Increased liquidity.
During the issuance process, it is possible that quota trading may be paralyzed for a short period of time.
But, for Caio Araújo, an analyst specializing in FIIs at Empiricus, this is not a reason to leave the asset out of the investment portfolio. “Given the current price level of the fund and the advantages of incorporation, I understand that it remains among the preferences”, he explains.
The end of FoFs?
The dissolution of the country's first and largest FoF raised doubts about the future of other assets of this type on the market.
Some analysts understand that “Funds of Funds” (which bring together shares from other FIIs, in addition to Real Estate Receivables Certificates) may be becoming outdated. But there are those who have another opinion, like Caio Araújo.
“I don’t see FoFs going extinct. Some funds even cater to specific investor profiles”, explains Caio. “However, it is natural that there is an improvement in fund regulation, as new strategies appear on the market.”
According to the analyst, the incorporation of FoFs by hedge funds is a movement that has been taking shape in the FII market for a few years. The main objective is to take advantage of a manager's structure to generate value with different types of financial operations, from investments in FIIs to credit and real estate development.
In addition to them, there are also other types of real estate assets on the market that can bring good returns – especially if combined to pursue specific profitability objectives above Ifix and CDI, as is the case with Empiricus' Top Picks portfolio.
Including this FoF, analyst Caio Araújo recommends four more real estate assets in the portfolio that can bring good returns. The report is available free of charge from Empiricus and can be accessed at the link below: