2023-09-27 20:09:41
The Structured Operations Certificate (COE) is an investment modality that combines the security of fixed income with the profitability possibilities of variable income. Although it is relatively new in Brazil, the COE has gained popularity for offering an interesting alternative for investors.
In this article, we will explore in detail what COE is, the different types of application, how the investment works, the expected return and the advantages and disadvantages of this modality.
What is COE?
The Structured Operations Certificate is a financial operation that combines a main fixed income asset with variable income derivatives. This structured combination can be an excellent opportunity to seek greater returns, investing in higher risk assets, such as shares on the Stock Exchange, without giving up the security provided by fixed income.
Unlike other countries, COE was only launched in Brazil in 2010. Since then, it has grown in popularity among investors looking to diversify their portfolios and take advantage of market opportunities.
Types of COE
There are two main types of COE: the guaranteed capital COE and the venture capital COE.
Guaranteed Capital COE
In the COE with guaranteed capital, the investor has the security that, even in adverse scenarios, he will receive back the full amount invested. This modality allows you to obtain significant returns, typical of variable income investments, without running the risk of losing the principal amount.
However, it is important to highlight that, although the amount invested is guaranteed, inflation can affect purchasing power over time. Therefore, it is essential to consider the relative devaluation of money due to inflation.
Venture Capital COE
In venture capital COE, the investor assumes the risk of losing the entire amount invested. On the other hand, this modality offers the possibility of achieving more significant profits if the investment strategy is successful.
It is essential to remember that the choice between COE modalities depends on the profile and risk tolerance of each investor. It is recommended to diversify investments and combine the COE with other market options to reduce risks and increase return opportunities.
How does the COE work?
Structured Operations Certificates are issued by financial institutions, which define the conditions of each security. These conditions include the maturity period, the minimum investment value, the remuneration rate and the investment gain and loss scenarios.
After issuance, the COE must be registered with Cetip (Central for Custody and Financial Settlement of Securities), which guarantees the security and efficiency of transactions. It is important to check whether the chosen brokerage has the Cetip Certifica seal, which ensures that the investment is registered in the investor’s name.
Each COE has a document called DIE (Essential Information Document), which contains all relevant information regarding the investment. It is essential to read this document carefully before investing, in order to understand the characteristics of the security and assess whether they meet the investor’s expectations.
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COE income
The COE’s income is made up of a fixed income part and a variable income part. The majority of the amount invested is invested in fixed income securities, generally issued by the bank itself. This provides investment security, because even if variable income has negative results, fixed income can compensate for losses and guarantee the total amount invested.
However, it is important to note that financial institutions may cap investment gains at certain levels. Therefore, it is essential to read the DIE and analyze the COE conditions before investing.
How to invest in COE
To invest in COE, it is necessary to open an account with a stock brokerage that offers this type of investment. After opening the account, the investor must transfer the desired amount to the broker.
With the amount available, the investor can analyze the COE options offered by the broker and choose the one that best suits their profile and investment strategy. It is important to consider other investments and diversify your portfolio to achieve more consistent results.
COE taxation
The COE is subject to Income Tax (IR) taxation in a regressive manner, according to the application period. The longer the term, the lower the tax rate to be paid. Check the rate table:
- Up to 180 days: 22.5%
- From 181 to 360 days: 20%
- From 361 to 720 days: 17.5%
- From 721 days: 15%
It is important to consider taxation when calculating the net return on investment.
Advantages and Disadvantages of COE
Investing in COE offers some advantages and disadvantages that must be considered by the investor.
Benefits
- Diversification of the investment portfolio.
- Possibility of obtaining higher returns than those offered by more conservative investments.
- Combination of fixed income and variable income in a single product.
- Security of the amount invested, especially in the guaranteed capital COE.
Disadvantages
- Restrictions and limitations imposed by financial institutions.
- Income Tax Taxation.
- Risk of total loss of the amount invested in the venture capital COE.
It is essential to analyze the investor profile, financial objectives and the conditions offered before making any investment decision.
Conclusion
The Structured Operations Certificate offers investors the opportunity to diversify their portfolios and seek more attractive returns. Combining fixed income and variable income, the COE presents different modalities that adapt to different investor profiles.
However, it is important to remember that the COE has specific characteristics and is subject to risks and limitations. Therefore, before investing, it is essential to understand the conditions of the security, analyze other available options and diversify the portfolio to achieve more consistent results.
COE can be an interesting alternative for those looking for greater profitability without giving up security. However, it is recommended to seek advice from a specialist and carefully evaluate the options available before investing in this modality.
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