(Bloomberg) -- Bradesco Asset Management, Brazil’s third-largest fund manager, has doubled its private credit team in the past two years as a booming corporate-debt market helps the industry weather slumping demand for other types of investments.
“Equity and hedge funds are suffering; only credit is growing,” Bruno Funchal, the company’s chief executive officer, said in an interview. Still, he said, monetary policy changes in the US and Brazil could upend the trend.
Bradesco Asset Management, Banco Bradesco SA’s fund-management arm, saw net inflows of 45 billion reais ($8.2 billion) this year through July, with credit products accounting for about 90% of the total, according to Funchal. That’s already triple the amount for all of last year, he said.
With interest rates holding at higher levels for longer than many analysts had predicted, many investors are moving money into credit funds in Brazil. Companies have sold 263.9 billion reais in local debt so far this year, almost double the amount in the same period last year, according to data compiled by Bloomberg. The credit-fund industry posted net inflows of 163.5 billion reais during the first six months of this year, according to SulAmerica Investimentos, with changes in tax regulations helping to fuel the trend.
Bradesco’s asset-management unit was prepared for the wave. Funchal said the credit team has expanded to 20 people from 10 in 2022, overseeing 300 billion reais invested in private credit. New credit funds have been launched, including a high-yield fund and a Fiagro, which invests in agribusiness credit. Plans include new credit and quantitative funds as well as one for real estate.
“In general, the new products are more structured, illiquid and publicly traded,” Funchal said.
Bradesco earlier this month hired Gabriel Trebilcock, one of the founding partners of hedge fund Ace Capital, to head the treasury desk’s local credit sales and trading business, where the lender aims to double revenue in about two years.
With a total of 850 billion reais under management, Bradesco Asset Management has about 240 employees and a goal of reaching 1 trillion reais by the end of 2025, Funchal said.
“I believe we will surpass 900 billion reais this year,” he said.
Funchal, who was formerly Brazil’s Treasury secretary, said a reduction in fiscal and monetary uncertainties in Brazil could help riskier funds, such as hedge and equity funds, perform better through the second half of 2024. He cited federal government budget guidelines for 2025 as one example.
In addition, “an expected reduction in US interest rates this year could unlock demand for riskier investments,” he said.
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