- The Copom followed the market consensus this Wednesday (31) and decided to reduce the country’s basic interest rate by 0.50 percentage points to 11.25% per year
- The continuation of the cycle of falling interest rates mainly benefits variable income investments, but experts still see good options in fixed income
- Survey shows investment income between R$1,000 and R$50,000 in different products with the new Selic level
The Monetary Policy Committee (Copom) followed the pace of monetary easing and reduced the basic interest rate of the country, the Selic, by 0.5 percentage points. With this Wednesday’s decision (31), interest rates are now at 11.25% per year – the lowest level since March 2022.
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The rate reduction is no surprise and, without further changes in the scenario, the market expectation is that the Selic fall to 9.0% at the end of 2024, as projected by the Focus Bulletin.
The prospect that the interest rate will only be stabilized when it reaches single digits has been affecting investment strategies since the Selic began to fall in August last year. After all, returns of 1% per month on fixed income low risk, as happened throughout 2023, may become increasingly difficult to achieve. But this does not mean that this asset class should leave the portfolio.
“With the prolonged interest rate cut cycle, risky or variable income assets start to attract attention”, says João Coutinho, economist at RJ+Asset. “However, Brazil still has one of the highest real interest rates in the world, which keeps investment in fixed income still attractive.”
The best fixed income options
A survey carried out by Rafael Haddad, financial planner at C6 Bank, shows that the fixed income assets with the highest net return with the Selic at 11.25% per year are the Real Estate Credit Letter (LCIs), Agribusiness letter of credit (LCAs) e as Debentures Encouraged. As they are assets exempt from Income taxthese investments guarantee higher returns than other better-known fixed income securities, such as the Treasury Selic or even Bank Deposit Certificates (CBDs).
The survey took into account an estimate of CDI of 9.97% in 1 year, based on the future DI contract, and an inflation expectation in 12 months of 3.86%, based on the most recent projection from the Focus Bulletin.
The simulation shows that an LCI of 96% of the CDI pays more than a CDB of 115% of the CDI, for example. This means that an investment of R$1,000 in both assets would yield, after one year, 9.57% versus 9.45%.
“Exempt securities gain important prominence when we make the calculation. On a daily basis, investors don’t pay attention and look for the highest nominal rate, but the ideal is to always do the math”, highlights Larissa Frias, financial planner at C6. “Especially for larger amounts and terms, the non-incidence of IR makes a big difference in the investor’s pocket.”
Another option that also pleases experts are pre-fixed or hybrid assets, those with a pre-fixed rate and a post-fixed index, such as the IPCA. Given the expectation that the Selic rate will continue to fall, this could be a good chance to “lock in” a higher profitability with an already pre-established rate.
C6 data show that, in one year, a CDB fixed at 11.3% per year has a net profitability of 9.32%; very similar to exempt titles, for example. Assets indexed to inflation, with an IPCA rate + 6.35% per year, offer the investor a net return of 8.63% in one year.
“Aiming for a scenario of longer maturities, the investor can still invest in inflation assets. The pre-fixed points are attractive, with premiums above 5% real return”, says Jaqueline Benevides, head of fixed income at InvestAi.
Even if one asset seems more attractive than another, experts reinforce that it is necessary to keep in mind the objective of that investment and the risk profile itself. Just because the interest rate is on a downward trend does not mean that the entire portfolio needs to be fixed-rate bonds, for example.
As we tell in this report, the emergency reserve must be allocated in a post-fixed asset, which is safe and has daily liquidity, even if this means a lower return. In this case, CDBs or the Treasury Selic itself are good options – the savings, as the survey shows, has the lowest return on fixed income. “In fact, savings have lagged behind in terms of profitability even considering other options that pay IR. The Treasury and the CDB itself end up having higher returns and with equivalent risk; in a slightly longer term, this difference becomes even greater” , says Larissa Frias.
How much does it yield to invest?
The C6 survey also outlined a simulation of income from contributions of R$1,000, R$10,000, R$25,000 and R$50,000 in different fixed income products with Selic at 11.25% per year. Net profitability was used (taxes and income tax discounted) and a period of 12 months. Check out:
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