The Growth and Size of the Brazilian Mutual Fund Industry

35 Pages Posted: 17 Mar 2010

Date Written: March 15, 2010

Abstract

This article describes the evolution of the Brazilian mutual fund industry, its regulatory framework, organization, types of investors and managers, economic environment and its relative growth. It show the evolution of this industry in Brazil and its idiosyncrasies providing a deeper look into one of the largest emerging market mutual fund industries. It emphasizes the growth of independent managers with more complex assets and sophisticated strategies that resemble international hedge funds. There are many popular and academic explanations for the mutual funds growth, some of which were tested in this article using a time series framework. The results suggest that financial market innovation and market risk are significant to explain growth. Common variables like economic growth, regulation and taxes were not statistically significant. Tax and regulatory changes were not significant in explaining the relative growth of the industry. Stock market returns were not significant in explaining the growth in the relative size of equity funds, but interest rates did affect the relative size of fixed income funds. The Brazilian mutual fund industry has several characteristics that are similar to the industries of continental European. The conclusion comes with a comparison between the evolution of the Brazilian and US mutual fund industries.

Keywords: emerging markets, Brazilian financial market, hedge funds, mutual funds, international asset allocation.

JEL Classification: G11, G15, G2, G23, G38

Suggested Citation

Varga, Gyorgy, The Growth and Size of the Brazilian Mutual Fund Industry (March 15, 2010). Available at SSRN: https://ssrn.com/abstract=1571553 or http://dx.doi.org/10.2139/ssrn.1571553

Gyorgy Varga (Contact Author)

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