Brazilian pensions receive green light to increase RE, Infrastructure investment

Brazilian pension funds are to be able to commit up to 20 percent of their capital to asset classes including real estate and infrastructure. The change in regulation is part of a wider strategy to reduce exposure to fixed-income assets.

Brazilian authorities are to make changes to the amount of money domestic pension funds can commit to equity investments, according to the country’s pension fund secretary Ricardo Pena.

According to a report by Bloomberg, Pena outlined proposals that will see pension funds able to commit up to 70 percent of their assets in equity investments, up from 50 percent previously. Brazil’s pension funds, which currently account for approximately $250 billion, currently invest 64 percent of their capital in fixed-income assets.

As part of the new regulation, pension funds will be able to invest up to 20 percent in structured funds that invest in sectors like real estate or infrastructure.

Previously pension funds were restricted to investing only 8 percent in any kind of real estate.

Pension funds will also be able to invest 10 percent in international funds approved by the Brazilian securities regulator or which trade on the Sao Paulo stock exchange.

Pena was addressing reporters in Brasilia. He said Brazilian funds need to take on more risk and had become too invested in public debt. He pointed to a drop in Brazil’s benchmark interest rate enabling fund managers to have more freedom to invest in riskier asset classes.

Brazilian funds are regulated by the government’s National Monetary Council