Exchange-traded fund assets in Brazil now total approximately 116 billion reais, the equivalent of $22.8 billion, reflecting almost a threefold increase over the past two years as investors gravitate toward tax-efficient vehicles tied to the country’s high-yield debt market.
Asset managers including BTG Pactual Asset Management and Itaú Asset Management have expanded their ETF businesses to respond to the stronger investor appetite. BTG Pactual’s ETF arm has grown markedly - from about 1 billion reais at the end of 2024 to more than 20 billion reais. Investo, which is backed by VanEck, has also seen significant gains, with assets rising to over 11 billion reais from roughly 1.7 billion reais in nearly two years.
Fixed-income ETFs have been a particular magnet for fresh capital. Data from capital markets association Anbima indicate these products attracted in excess of 27 billion reais of new investments so far this year. Market participants highlight two structural advantages that have supported demand: generally lower fee levels compared with many actively managed alternatives and exemption from a tax collection mechanism that requires investors in traditional fixed-income funds to prepay income tax twice a year.
The move into ETFs is not confined to Brazil. Listings across other Latin American markets have also expanded: Colombia has recorded a 24% increase in ETF listings year-on-year, while Chile’s listings have risen by 37% over the same period.
Mexico’s ETF and exchange-traded product universe has expanded as well. According to ETFGI, assets in Mexican ETFs and ETPs rose to $15.3 billion from $14.3 billion a year earlier. Large institutional investors in Mexico are employing these instruments to obtain exposure to overseas equities, notably U.S. technology and artificial intelligence companies, a trend highlighted by Ignacio Saralegui, head of portfolio solutions in Latin America at Vanguard.
Pension funds in Mexico, known as Afores, are also turning to ETFs to access equity markets. Principal Afore, which manages nearly $26 billion in assets, cited the growth of thematic and active ETF vehicles as a contributor to the market’s expansion, according to Nestor Fernandez, the firm’s chief investment officer.
Bottom line - Brazilian ETF assets have surged to roughly 116 billion reais driven by flows into fixed-income ETFs that benefit from lower fees and tax exemptions, while ETF ecosystems across Latin America are growing as institutional and retail demand expands.