The rally in the Brazilian stock market , with a rise of more than 37% in one year, was not enough to dampen the appetite of equity fund managers. This is shown by the "Managers' Perspective" survey by Empiricus , conducted with 26 long-only equity fund managers between March 1st and 9th.
Combined, the asset managers who participated in the survey have a total of approximately R$ 86.7 billion under management in long-only and long-bias equity funds.
The survey shows an industry more exposed to risk, concentrated in large and liquid companies, but with a growing willingness to capture any additional upside potential from the local stock exchange.
Proof of this is that the cash reserves of equity asset managers fell to 6.8%, compared to 9.6% in the previous month, while the median dropped from 8% to 5.2%. In parallel, the share of managers with cash reserves equal to or less than 2% rose from 19% to 27%.
In other words, a larger portion of the industry has returned to operating closer to fully invested , reducing the defensive posture that had gained ground in recent months.
Not even the conflict with Iran has diminished the optimism of fund managers, who are simply adopting a more cautious stance regarding their exposure to oil. More than half of the asset managers reported having exposure to the sector below the Ibovespa index, while 26.9% said they have no position in oil. No firm declared exposure above the index.
However, when prompted to assess the effect of the conflict on the sector's theses, 17 managers pointed to a positive impact only in the short term, without structural change. Only one vote indicated a negative short-term effect, while there were no responses suggesting positive or negative structural change.
In the estimate for the price of oil in 12 months, among those who felt comfortable answering, the most cited range was between US$70 and US$80 per barrel, followed by below US$70.
And optimism regarding the stock market continues into the medium term. When asked about expectations for the next six months, most continue to point to stability in cash levels with no indication of an increase ahead. This shows that managers still do not see a need to further protect their assets.
In fact, managers believe they can achieve higher returns. The average expected return (nominal IRR) of the portfolios rose from 19.3% to 20.3%, while the median remained at 19.2%. Half of the responses already indicate an IRR above the historical average for each fund, a reversal from the previous month.
Most fund managers continue to classify the market as cheap, with a smaller, but still significant, portion viewing the stock market as well-priced.
The research also shows that 53.6% of the average allocation is concentrated in large, liquid companies with a market value exceeding R$ 20 billion. The lower price ranges lag far behind: 17.2% in companies valued up to R$ 5 billion, 13.7% between R$ 5 billion and R$ 10 billion, and 11.1% between R$ 10 billion and R$ 20 billion.
The investment is concentrated in companies with healthy balance sheets and moderate capital structures. The weighted average leverage of the invested companies remained practically stable, at 1.7 times net debt to EBITDA, with a median of 2 times.
The preferred sectors were public utilities, followed by the financial and retail sectors. These sectors demonstrate a search for predictable cash flow generation, exposure to names sensitive to the domestic cycle, and interest in theses that are still undervalued.
However, the optimism of fund managers has not yet reached investors. Looking at the monthly figures, the perception of neutral inflows predominates, suggesting a gradual decrease in the intensity of redemptions.
However, over the past 12 months, the overall picture remains predominantly negative. Retail, private wealth, and family offices appear as the main sources of capital outflows, followed by pension funds.
According to data from Anbima up to February, equity funds suffered net redemptions of R$ 6.9 billion, the worst performance among fund classes.
