If in April the dollar reached R$4.60, the value has now surpassed R$5.30. Currency instability has brought another fact: a euro is worth a dollar for the first time in 20 years. If this variation makes travel more expensive for tourists, for more experienced investors it can represent an opportunity to earn money.
More investors are starting to look at the myriad options of assets that are traded in foreign currencies, such as overseas investments. But one way out are also funds in dollars or euros, the so-called exchange funds. See if it is worth including this investment in your portfolio and what the risks and opportunities are.
According to the rule, exchange funds have 80% of their investments linked to a foreign currency. Typically, the remaining 20% is allocated to fixed income funds, which are considered more conservative and less volatile. It is important to note that the investment and withdrawal are made in reais. However, the modality should be an alternative in specific cases.
For whom is it interesting to invest in foreign exchange funds? “We only recommend investing in a currency or an exchange fund for those who have a clear objective for that currency in the future, such as someone who works with imports or someone who is going to travel abroad”, says the head of economics at Rico Investimentos, Rachel de Sa.
And there are a few reasons for that. According to the expert, even with macroeconomic models that consider the interest rate, GDP growth, commodity prices (especially in the case of Brazil, an exporting country), trade and investment flows, to try to predict the future values of foreign currencies, it is difficult to get an accurate estimate of what the dollar or euro will be worth in the future.
In addition, foreign exchange is also a financial asset, in which fiscal, political and country risks are considered.
Can I put money into foreign investments? On the other hand, instead of putting the money in an exchange fund or buying the currencies in cash, a person can invest in stocks on the stock exchange or in a fund that has international investments, says Rico’s head of economics.
Thus, the investor can gain from all the economic activity in that country, and not just from one asset. It is also able to access sectors that are not available or do not have the necessary maturity in Brazil, such as technology, games and ESG (a concept that summarizes the environmental, social and corporate governance pillars of companies). Another advantage is to protect itself from possible turmoil in Brazil, both in the economy and in politics.
How to invest? For those who wish to invest in foreign exchange funds, the purchase is quite similar to hedge funds, fixed income, shares or private credit. The person needs to have an account at a stockbroker and select the investment funds option.
Taxation is similar to that charged by the Tesouro Direto: it starts at 22.5% of income for investments in six months, and drops by 2.5 percentage points per semester until reaching 15% for investments held for two years.
One dollar fund is Trend Dolar FI Exchange, managed by XP. In the last year, the fund registered an increase of 7.91%. In 2022, it rose 1.69%. In euro, the option is the BB Cambial Euro LP, from Banco do Brasil. However, the fund fell by 1.50% in 2021 and 13.57% in 2022.
What is the outlook for these investments? With the risk of a global recession in 2023 and the rise in interest rates in the United States – currently in a range of 1.5% to 1.75% per year –, many investors turn to the American market, as government bonds begin to pay most.
In addition, the country has a lower risk, which strengthens the dollar against all currencies, including the euro.
Between July 23 of last year and the same day in 2022, the price of the euro in the US currency dropped from US$ 1.1925 to US$ 1.0210, a drop of 14.3% in 12 months. On July 12, the dollar and the euro reached parity in value for the first time in 20 years, that is, 1 euro was equal to US$ 1.
Does parity affect Brazilian investors? For the investor, however, there is little practical effect in the oscillation between the two currencies. It’s much more interesting to look at trends and uncertainties on the horizon before making an application, experts say.