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Living on income is a dream shared by many people. One of the ways to achieve this includes investing in alternatives that make it possible to receive passive income. Among the available options are real estate funds (FIIs), such as HGLG11.
It is among the most traded funds on the stock exchange and may be of interest to anyone who wants to take advantage of the results of the real estate sector without having to buy a property. However, do not invest in it without first knowing its operation and its main characteristics.
In this article, you can check out details regarding the HGLG11 real estate fund, as well as possible advantages and risks of the investment. Don’t miss it!
What is a real estate fund and how does it work?
The initial step in understanding HGLG11 is to explore the concept and functioning of real estate funds. Also called FIIs, these funds are types of variable income collective investment.
Structurally, they are similar to a condominium, since the shareholders are on one side and the resource manager on the other. To participate in this investment, it is necessary to acquire shares of the respective fund on B3, which is the Brazilian stock exchange.
The fund’s equity is managed by a professional manager, who is responsible for choosing investments and carrying out operations. Shareholders are responsible for paying the management and performance fee (if any), which are intended for the manager’s remuneration.
Gains on this investment can be obtained in several ways, such as the appreciation of the sale price of the shares in relation to the purchase price. In addition, it is possible to profit from receiving dividends, since FIIs must distribute at least 95% of their profits each semester.
Regarding taxation, FII dividend earnings are exempt from Income Tax (IR) for individuals. However, this exemption does not cover profits obtained from the sale of quotas. In this case, the investor will have to pay 20% of the IR in daily operations (day trade) or normal operations (with a term greater than one day).
The payment of the IR must be made through the Federal Revenue Collection Document (DARF) until the last working day of the month following the operation. The exemption from IR that falls on shares when the monthly sales volume is less than R$ 20,000 does not apply to FIIs either.
What types of background exist?
Now that you have seen what FIIs are and how they work, it is necessary to point out that they can be classified in different ways – depending on your investment strategies. Check out the three main types:
brick backgrounds
Brick funds are FIIs that adopt the strategy of buying physical properties to later sell or rent them. This involves the acquisition of commercial buildings, logistics warehouses, shopping malls, hospitals, bank branches, corporate buildings and more.
paper backgrounds
FIIs that prioritize investment in fixed income securities linked to the real estate sector are known as paper funds. Examples include real estate credit notes (LCI), real estate receivables certificates (CRI), guaranteed real estate notes (LIG), among others.
funds of funds
Also known as FOFs (funds of funds), funds of funds are FIIs that prioritize the acquisition of quotas in other investment funds. In this case, the objective is to take advantage of the results of different portfolios, strategies and management.
What is HGLG11?
If you’ve ever followed the stock market, you’ve probably noticed that each asset has a ticker or trading code. It is common for this code to consist of a sequence of numbers and letters.
In this sense, HGLG11 is the ticker for trading shares of CSHG Logística — FII, which is a logistics brick fund. Its objective is to buy or build properties for rent and generate a monthly income — especially with logistical and industrial warehouses.
Check out its main features below!
When was this fund constituted?
CSHG Logística — FII was formed in May 2010, joining B3, the Brazilian stock exchange, through an initial public offering (IPO) in June of that year. It is organized in the form of a closed condominium and has an indefinite duration.
Who manages HGLG11?
HGLG11 is managed by Credit Suisse Hedging-Griffo. In June 2022, the management fee charged by the fund was 0.6% per annum of its market value traded on the exchange. In the same period, there was no performance fee.
What is the number of shares and shareholders in the fund?
According to the fund’s monthly report for May 2022, it had 23,456,675 shares issued in that period. Until that time, HGLG11 had completed 8 issues of shares — the IPO and the other subsequent offerings (follow on). The report also indicated the participation of 311,356 shareholders.
What is the composition of his portfolio?
As of May 2022, the majority of HGLG11’s portfolio is physical real estate. The portfolio had 19 properties located in São Paulo (11), Minas Gerais (3), Rio de Janeiro (2), Pernambuco (2) and Santa Catarina (1). Furthermore, the fund had income from other FIIs, CRIs and fixed income.
Does HGLG11 pay dividends?
CSHG Logística — FII is a fund that is programmed to distribute monthly dividends, with an extensive payment history. Income earned in the semester may be distributed up to the 10th business day of the month following the receipt of funds.
What are the advantages of investing in HGLG11?
After knowing the main features of HGLG11, many people are interested in knowing the possible benefits of investing in it. Is it your case?
The first advantage to highlight may be the diversification potential provided by the fund. As you have seen, in May 2022, HGLG11 had around 19 properties in its portfolio. In this way, with just one quota you might be exposed to the results of all these goods.
Also, keep in mind that, if one of these properties remains unoccupied, the fund may preserve the distribution of dividends with the rents received from the others. Thus, there is less chance that you will not receive the desired dividends.
However, it is important to highlight that past earnings are no guarantee that the fund will maintain regularity or the amounts paid. So, before investing in it, check the FII’s current situation and the distribution prospects for the coming months.
Another advantage concerns accessibility. It is common for the share price of an FII to be much lower than what you would spend to buy one or all of the properties included in your portfolio. Thus, even with little money, you will be able to enjoy the results of the sector.
What are the risks of investing in HGLG11?
As real estate funds are part of variable income, the main risk of this investment is related to the possibility of you losing money. This is due to market risk, which causes the price of shares to follow the law of supply and demand.
Therefore, depending on the mood of investors and market conditions, prices may rise or fall. If you buy shares and they devalue, you may suffer losses if you decide to redeem the investment at that time.
Another risk present in real estate funds is the risk of vacancy (physical or financial) — especially in brick funds, such as HGLG11. As you learned, these types of funds depend on rents or the sale of real estate to earn profit and distribute dividends.
In the event that the property becomes vacant (physical vacancy) or the tenant does not pay the rent (financial vacancy), the fund may suspend the payment of dividends. This can disrupt not only the fund, but the investor who, eventually, is counting on the income from that proceeds.
How to invest in this FII?
If following checking the advantages and risks of investing in FIIs, such as the HGLG11, you understand that it is worth making the allocation, you must learn how to do it. The first point to be evaluated, in this sense, refers to your investor profile and your level of openness to risks.
Therefore, it will be necessary to assess whether the risk present in FIIs is in line with what you expect as an investor and whether it is adequate for your objectives. Also, be sure to consider issues such as the fund’s strategy, the composition of its portfolio, management fee and other points.
This information can be checked in the fund’s prospectus or on its slide. Both are documents with the most important data on the functioning of the FII — the first is a more complete version and the second is a summarized booklet.
To proceed with the investment, open an account at an investment bank. This institution is a necessary intermediary for this type of operation, and provides access to a home broker.
This platform connects you to the exchange environment, where FII shares are traded. The step-by-step process for making the contribution is as follows:
- access the home broker;
- enter the desired FII trading ticker (such as HGLG11);
- define the number of shares and the amount you want to pay;
- place the buy order and wait for the transaction to settle.
Conclusion
Have you seen how easy it is to invest in real estate funds, such as HGLG11? They can help you take advantage of real estate results without having to buy a property. So, if you are going to invest, check which FIIs best suit your needs.
Interested in HGLG11 or FIIs in general? Get in touch with us from Renova Invest and count on our team to find out regarding this and other opportunities for your portfolio!
