Carol Borges, analyst specializing in FIIs at EQI, indicates when Ifix can start to 'take off' and how to invest now to 'surf' this recovery (Image: Canva Pro)
Many investors are concerned about the performance of real estate funds in the coming months. This is because, historically, FII usually have a performance inversely proportional to the trajectory of the interest rates not country.
In other words, the tendency is that, when interest rates experience a downward trend, real estate funds increase in value. Just as, in cycles of high SelicFIIs listed on B3 tend to have a drop in performance.
It is worth remembering that the Copomthe Central Bank's Monetary Policy Committee, raised the Selic rate to 10.75% per year at the last meeting – an increase of 0.25 percentage points. And projections show interest rates even higher, reaching up to 11.75% per year at the end of 2024, according to the Focus newsletter.
But are there really reasons for investors to despair now?
According to Carol Borges, specialist in FIIs and head of investment analysis at EQI Research, Copom's major current concern is with the tax policy – which needs to be “credible, based on predictable rules and with transparency in its results”, according to the minutes of the last meeting.
With the economy very strong, the labor market generating jobs and the GDP (Gross Domestic Product) coming in above expectations, in addition to projections for inflation rising every week, Carol says that it is natural for the market to expect a cycle of interest increases that could last until the first half of next year.
There is no evil that lasts forever…
However, FII investors need to pay attention to market analysis to not miss the timing of the sector’s recovery.
She explains: according to the performance history of the Ifix – the main reference index for real estate funds –, it tends to start its growth curves one just before the Selic actually started to fall.
In other words: if you wait to invest in real estate funds at the moment when interest rates have their first cut, you may have already missed the first “leg” of rise in FIIs, which historically happens before that.
In the graph below, for example, it is possible to observe the comparison between Ifix and the curve of NTN-B titles (or IPCA+ Treasury) over the last few years:
According to the expert, this is a more assertive way of matching Ifix's performance, since it is the expectation for these titles that serves as “beacon” for the pricing of real estate funds.
“If this increase in the Selic rate by the end of the year, or beginning of next year, manages to anchor inflation expectations again and make the IPCA move towards the center of the target, we could see this interest curve closing, or In other words, this drop in interest rate expectations will happen, as was seen between 2018 and 2019. Then we will see the Ifix rising and this happens before the Selic actually starts to fall.”
It is worth remembering that the Focus bulletin itself estimates the interest rate on a downward trend from next year onwards – to 10.75% per year in 2025, to 9.50% per year in 2026 and to 9% per year at the end of 2027.
The biggest problem, in the expert's view, is when the investor has a very “short-termist” about this type of investment.
“When you evaluate the good FIIs, those with a good history and good diversification, they beat fixed income, the CDI, the IPCA +6%… it is important that you are able to put together this portfolio well and have an adequate view of the investment term. ”
But, after all, which FIIs to invest in now?
Faced with this scenario of rising interest rates and fiscal uncertainty, FII specialist Carol Borges, from EQI Research, indicates that Paper FIIs are a good investment alternative.
It is no surprise that, in 2024 (until September 24th), these funds have the best performance in the category, as you can see below:
The portfolio of a paper FII can be indexed to the IPCA, the CDI, or even a mixture of the two indices, and is a good option in the scenario of higher interest rates. But she points out:
“We are talking about credit. If you're getting paid, it's because someone is paying. If the person is having to pay a very high premium, it may be that at some point they will no longer be able to afford it and this will create a problem for the shareholder… Therefore, here we prefer allocation to FIIs with a low to moderate risk profile, even IPCA +8%, CDI +2.5%… And always close to the equity value.”
And, among brick funds, are there any good opportunities?
In the brick FIIs category, the specialist recommends investing in funds that have more predictability – that is, those formed by assets with long-term contracts.
In this sense, it highlights the attractiveness of FIIs of logistics warehouseswhich bring more security to the investor as they also have contracts with annual correction (most of the time linked to the IPCA) and a very relevant contractual fine.
“By investing in real estate funds for logistics warehouses with high occupancy (they currently have minimal vacancy rates) and with extended lease terms, you bring predictability to your portfolio.”
This has been the top choice from EQI for allocation among brick FIIs, according to Carol.
An example of a recommendation is the Guardian Logistics (GARE11) which, according to the expert, has longer terms, good tenants and asset diversification – therefore, it meets the most conservative requirements for allocation at the moment.
But it is not the top logistics FII recommended by EQI Research. In a recent reportanalysts at the house indicated another real estate fund in the sector that, in just over six years, returned 128.6% to the investor.
To give you an idea, this return was higher than the average generated by the securities market. real estate for rent in São Paulo and the rest of the country.
And it’s not even the most profitable on that list…
Another real estate fund listed by EQI Research on that same list came to generate 199,7% return over the same six-year period (between January 2018 and May 2024).
It is no surprise that, in the opinion of EQI Research, these are the 5 best FIIs of the Brazilian stock exchange for investors to have in their portfolio now.
The 5 real estate funds that yielded more than real estate are available on B3 for any Brazilian investor. And, with a initial investment of less than R$1 thousandit is now possible to create a portfolio with recommendations.
To meet them, you don't need to pay anything. The portfolio recommended by EQI Research is available for free at the link below: