The limits of fixed income: pension funds are (slowly) experimenting with a return to risk.

Closed-end supplementary pension funds ended 2025 with R$ 1.374 trillion under management and more conservative than ever. Fixed income allocation reached a record 85.2%, almost ten percentage points higher than four years ago. On the other hand, variable income fell to historic lows of 7.6%, according to Abrapp.

Despite this extreme conservatism, a movement—albeit still timid—towards a return to riskier assets is beginning to emerge. Consulting firms and foundations interviewed by NeoFeed indicate that, although fixed income remains dominant, there are signs that the limit to this growth is approaching and that diversification may regain ground.

The first is that the closed supplementary pension industry has changed in recent years with the growth of newer Defined Contribution (DC) and Variable Contribution (VC) plans, which allow participants to choose their risk profile. More than half of these plans already allow the choice of profiles.

The ability to choose risk profiles has transformed participants' behavior. They have started comparing their results with those of open-ended pension plans and other financial products. And, as the industry average has fallen below the CDI rate — with CDs yielding 14% and CVs 13.6% — pressure is growing for entities to accept more volatility when there is a migration to moderate and aggressive profiles.

A study by Aditus, involving 140 foundations with a combined net worth of R$481 billion, shows that 43 of them already offer this option. In the 12 months leading up to March, there was an increase of more than seven percentage points in the conservative profile, which reached 40% of the sample — one of the factors explaining the growth of fixed income investments in 2025.

But this picture is beginning to change. The consultancy has already identified a positive shift towards more aggressive profiles in January and February, with allocations exceeding 20% in equities, which should be implemented soon.

The case of Vexty, formerly Odebrecht Previdência, is an example. The entity, which has more than R$ 5.5 billion in the Vexty Plan, has approximately 82% of its portfolio consolidated in local fixed income, both post-fixed linked to the Selic rate and indexed to inflation.

According to Vinicius Narcizo, director of investments and finance at Vexty, this allocation reflects the high interest rate environment, but also the profile of the participants.

“Our participants are still predominantly in the conservative profile,” he says. “In the longer-term profiles, recommended for participants with an extended accumulation horizon or greater risk tolerance, greater exposure to assets with higher short-term volatility but higher expected returns in the long term makes sense.”

This year, however, there has already been a shift towards moderate and aggressive profiles, which allow for allocation of 20% or more to variable income investments, depending on the policy of each plan.

According to Guilherme Benites, partner at Aditus, the sample monitored by the consultancy has already shown a positive shift in January and February towards more aggressive profiles, which have more than 20% allocated to variable income. These will be implemented soon according to the rules of each plan.

“Now, with the profiles, the participant decides the allocation, and as they become more aggressive, managers need to change quickly. And, since the defined contribution (DC) plans are in cash, linked to the CDI (interbank deposit rate), this can happen very quickly,” he says.

The stock market 's return in 2025 may have triggered a warning for participants to change their investment profile. The Ibovespa rose 33.95%, and the entities captured this well, with an average return of 40.54%, well above the 11.73% delivered by fixed income. But the stock market was barely present in the portfolios, so the impact on the consolidated result was limited.

Especially if the Selic rate falls and the CDI loses attractiveness, this shift in investment profile could gain momentum. The market consensus is that the rate will reach 13% by the end of the year. However, experts believe that the market should start to react more strongly when it reaches 12%.

“The 1% monthly return is the curse of the Brazilian market,” says Benites. “With a lower CDI rate, participants will have to differentiate between long-term and short-term investments.”

What also hindered diversification in recent years was the performance of managers of riskier asset classes. Despite the stock market recovery in 2025, past performance still weighed on the decision-making of foundations.

“The recent history shows poor performance from asset classes combined with bad results from active management, which underperformed the indices for most of the period, discouraging allocation,” says José Carlos Lakoski, financial director of the Copel Foundation, which manages R$ 15 billion.

According to Marco Tulio Coutinho, vice president of institutional clients at Brunel, this pessimism regarding the performance of actively managed funds may lead foundations to reduce the number of managers they select and to prefer allocation via ETFs , which allows for faster risk accumulation if necessary and risk reduction as well.

“Selecting managers is a long and laborious process. If the fund doesn't perform well, the manager is questioned about their choice. So why take that risk?” he says.

The second point is that in plans where there is less incentive to diversify and more need to match assets and liabilities, this process is already practically complete. In other words, it shouldn't significantly increase allocation to fixed income.

This is the case with older Defined Benefit (DB) plans, which represent 53% of the industry and in which the participant is guaranteed a value to receive upon retirement. In these plans, the important thing is to meet the actuarial target, currently around IPCA + 5.5%. With high interest rates and NTN-Bs paying above 7%, it was a natural move to lock in liabilities with these assets, in a strategy known as "portfolio immunization".

Vivest , the fourth largest pension fund in the country, with R$ 42 billion under management, is an example of this movement. In its Defined Benefit plans, the foundation advanced in 2025 in the process of immunizing its portfolios, marking a significant portion of government bonds to market. With this alignment already in place, there is little incentive to change the allocation.

“This strategy reduced the sensitivity of investments to market fluctuations and provided greater balance between assets and liabilities,” says Paulo Werneck, investment director at Vivest.

FAPES, with R$17.5 billion under management, has also moved in this direction. In the foundation's defined benefit plan, approximately 75% of the portfolio is protected. This move was financed by the sale of real estate investments and by reducing exposure to higher-risk asset classes, such as equities, international investments, and private credit. Exposure to multi-market funds has been zero since 2022.

“We sacrificed one year of relative return to gain predictability and real return for more than 30 years,” says Leonardo Mandelblatt, investment director at FAPES.

In 2025, FAPES' defined benefit plan had a return of 13.1%, below the CDI rate, but equivalent to approximately 130% of the actuarial target.

On average across the industry, defined benefit plans (DBs) yielded 13.2% last year, below the CDI rate of 14.3%.

So what can we expect throughout this year?

NeoFeed spoke with five foundations to understand if they are already increasing their risk exposure this year or structuring this shift, and which assets could grow in their portfolios.

At Vivest, the drop in interest rates is already being considered as a factor capable of changing the dynamics of asset allocation.

“When real interest rates start to fall, the need to seek more diversification and increase exposure to riskier assets naturally grows,” says Werneck. “At times, the portfolio really needs to get a little more spicy, but always responsibly and through process.”

The foundation says it evaluates opportunities in equities, infrastructure, and credit, always respecting the profile of the plans and risk limits. According to Werneck, the logic is to seek a more balanced portfolio, better prepared for different scenarios.

At FAPES, the outlook is more cautious due to the uncertain geopolitical landscape. At the same time, the foundation believes that this volatility may present interesting tactical opportunities throughout the year.

“We understand that we are better compensated by waiting, keeping part of the portfolio in CDI and capturing the high carry of NTN-Bs,” says Mandelblatt. “The resumption of risk-taking tends to occur gradually and in a disciplined manner, taking advantage of specific windows of market stress.”

At Vexty, the Selic rate cut may also open up space for riskier assets, but gradually. Since the profiles are already structured according to investment horizon and risk tolerance, adjustments tend to be gradual and within the limits of each portfolio.

“In a context of falling Selic interest rates, it is natural for riskier assets to gain relative attractiveness, and this can open up space for tactical movements within portfolios, whether by marginally increasing exposure to variable income, or by exploring opportunities in private credit, multi-market funds, or even international allocations,” says Narcizo.

At the Copel Foundation, the stance remains cautious. "The strategic allocation defined in the Investment Policy for the year still carries less risk than historically," says Lakoski. According to him, the scenario still combines high interest rates, geopolitical turbulence, and the volatility typical of an election year, although the foundation may make tactical adjustments if it deems certain asset classes attractive.

And the Fachesf foundation, with approximately R$ 9 billion under management, believes it is already well-positioned in its investment portfolio plans for the current scenario, with 6% allocated to equities and 10% to structured products, which include multi-market funds, real estate funds, and agricultural investment trusts (FIAgros).

“The defined contribution (DC) plans already have significant exposure to risky assets, which allows them to capture potential gains in a scenario of falling interest rates and asset appreciation. We have already positioned the portfolio for a possible cycle of falling interest rates,” says Kepler Dias, investment manager at Fachesf.

The presidential elections at the end of the year add another layer of volatility to portfolios. Currently, foundations are observing the scenario and maintaining some cash flexibility, precisely because the electoral noise can open up opportunities in assets that have been off the radar in recent years.

“Election periods tend to generate more volatility and, therefore, also opportunities. With the CDI at a high level, it makes sense to carry a little more cash to preserve flexibility and capture sharper market movements,” says Mandelblatt.