Brazil’s wealth managers turn defensive as family offices abroad double down on risk
Brazil’s family offices are moving in the opposite direction of their North American peers. While US investors pile into private credit and AI-driven growth, Brazilian wealth managers are building buffers, expanding exposure to fixed income, tax-exempt bonds, and government bonds (Reuters/Nacho Doce)
Brazil's wealth managers* have adopted an increasingly defensive stance in 2025, turning to fixed income and diversified investment strategies to navigate political and market volatility.
According to data from Anbima, the association representing Brazil's financial and capital markets, wealth managers' assets under management increased to $100bn as at June 30 2025, up 7.1 per cent from the end of 2024. The uptick reflects growing demand for more traditional allocations amid slowing growth and persistent uncertainty at home and abroad.
"The managers relied on diversification strategies to navigate domestic and international challenges," says Tatiana Itikawa, Anbima's superintendent of market representation. "We saw important advances both in fixed income and in equities."
Fixed income leads the way
Fixed income assets rose 9.4 per cent to $45bn, representing 45.4 per cent of total portfolios, up from 44.5 per cent at the end of 2024 and 40.9 per cent in June 2024. Within fixed income, tax-exempt credit instruments stood out, particularly Letras de Crédito Imobiliário (LCI) and Letras de Crédito do Agronegócio (LCA), two uniquely Brazilian products.
LCIs are real estate–backed credit notes that offer tax-free yields to individual investors, while LCAs are agribusiness-backed credit notes with the same tax exemption.
Holdings of LCIs surged 43.1 per cent to $3bn, LCAs gained 19.7 per cent to $2.5bn, and tax-incentivised corporate bonds (debêntures incentivadas) climbed 6.5 per cent to $2.9bn. These bonds, which often finance infrastructure or sustainable development projects, are exempt from income tax and continue to attract long-term investors.
Investments in real estate receivable-backed securities (CRI) rose 9.6 per cent to $1.8bn, while assets held in agribusiness receivable-backed securities (CRA) declined 4 per cent to $1.1bn. Holdings of covered bonds (LIG), secured by real estate loans, increased modestly by 1.3 per cent to $800mn.
By contrast, investments in traditional debentures and bank certificates of deposit (CDB) saw declines, showing a selective approach even within the safety of fixed income. Funds tied to credit receivables (FIDC) rose almost 31.9 per cent to $6.7bn, and public debt holdings increased 10.7 per cent to $7.9bn.
Considered risk-taking
On the riskier side, investments in multi-market funds — Brazil's hybrid vehicles similar to global balanced funds — fell 11.9 per cent to $12bn, dragging the hybrid segment down 4.8 per cent overall.
Equities, however, staged a modest comeback. The equity segment rose 10.1 per cent to $33bn, or 33.1 per cent of total portfolio allocations, aided by the Ibovespa stock index's 15 per cent rally in the first half of the year.
Equity funds accounted for $14bn, up 7.3 per cent, while direct equity holdings advanced 17.4 per cent to $12bn.
Still, the overall message is one of cautious diversification. Managers have not retreated from risk, but they are distributing it across more asset types, favouring predictability and liquidity over speculative plays.
This shift is mirrored among institutional investors. Previmpa, the public pension system for Porto Alegre, recently terminated a series of managers from its equity portfolio and redeployed capital into inflation-linked government bonds (NTN-Bs) maturing as far out as 2060.
Similarly, Funcef, Brazil's third-largest pension fund, allocated $2.3bn to long-duration Treasuries between January and July, prioritising stable real returns and liability matching.
Both funds' actions reflect the same defensive tone evident in Anbima's data: a turn toward instruments that offer cash flow visibility and inflation protection.
Family offices extend the same logic globally
Among Brazilian family offices, the same mix of prudence and diversification prevails, but with an international twist.
"The principle is to run a balanced portfolio, avoiding concentration and offsetting risk factors," said Renan Rego, chief investment officer at São Paulo-based G5 Partners, which manages more than $6.4bn for over 300 families.
G5 has increased offshore allocations since 2023, using foreign equities to hedge domestic currency and political risk. "If I'm long local equities, I may want offshore exposure to hedge the client's currency risk," Rego told MandateWire.
The approach reflects a broader mindset among Brazilian ultra-wealthy investors: protect first, diversify second, and capture opportunity last.
Political cycles are a constant catalyst. "Elections add a layer of binary risk," Rego said. "That makes international exposure important for long-term capital preservation."
Even as US politics reintroduced volatility, G5 maintained moderate risk exposure, calling the US equity market — particularly the S&P 500 — "the vacuum cleaner of global liquidity." Technology remains a long-term anchor, accessed through both direct investments and top-tier venture funds.
Rego also sees Brazilian family offices evolving from macro-driven allocators to micro investors, sourcing specific deals and niche managers while maintaining overall portfolio discipline. "We love the micro," he said, "but it has to come with risk parameters from the macro side."
A split screen: US family offices embrace volatility
While Brazilian investors focus on preservation, many US family offices are taking the opposite stance as they embrace volatility and niche assets.
In Texas, the Patterson Thoma Family Office is building a private-debt platform to fund real-estate-heavy banks, while developing a 5,300-acre housing project near Houston. "Dallas is one of the most back-to-office metro areas," said CIO Colin Patrick, underscoring a conviction that commercial property remains undervalued.
In Boston, Max Osbon, owner and managing partner of Osbon Capital Management, remained bullish on artificial intelligence and natural resources, calling copper a key play for the renewables transition. "Bearish narratives rise above positive narratives," he said, while affirming confidence in private credit despite jitters in the business development company space.
And the Duquesne Family Office, which manages roughly $4.1bn, has been doubling down on hard assets — taking a 15 per cent stake in tungsten explorer Guardian Metal Resources and reinvesting in semiconductor giant Broadcom.
Together, these examples show a clear contrast: Brazilian allocators are hedging volatility, while US peers are monetising it.
The divergence speaks to different market backdrops. Brazilian inflation remains above the central bank's target, fiscal uncertainty lingers, and a general election looms. Meanwhile, in the US, a strong dollar and deep capital markets are emboldening family offices to experiment with niche strategies.
Both approaches, however, share a common thread: the search for control, whether through predictable cash flows or through direct ownership of opportunity.
For Brazilian managers, the strategy appears to be paying off. With fixed income accounting for 45 per cent of portfolios and equities 33 per cent, Anbima's members are balancing protection with participation.
As Rego put it, "We're not here only to grow capital but also to preserve it — to keep purchasing power ahead of inflation, with relevant real gains across cycles."
That philosophy could define Brazil's wealth management industry for years to come: steady hands in a turbulent world, standing in contrast to their risk-embracing counterparts abroad.
*Wealth managers include all registered family offices and multi-family offices in Brazil, according to Anbima.