New Investment Fund Offers Brazilian Investors Access to U.S. Small-Cap Equity Market
Brazilian investors seeking diversification and potentially high returns now have a unique opportunity to tap into the U.S. small-cap equity market.
A new investment fund, launched through a partnership between Itaú Unibanco, Gama Investimentos, and Portolan Capital Management, is exclusively available to Itaú Private Bank clients. This fund provides a complementary strategy to investments in the S&P 500, offering access to a segment of the market often overlooked by traditional portfolios.
“The current valuation differential is one of the largest in recent decades, comparable to periods like the Nifty Fifty and the dot-com bubble,” says Bernardo Queima, CEO of Gama Investimentos, highlighting the strategic timing of the fund’s launch.
Focus on Undervalued Gems
The Portolan Equity Strategy Selection fund strategically focuses on companies with market values ranging from $100 million to $3 billion. This segment, known as small-caps, is often considered a breeding ground for innovation and growth potential. By carefully selecting undervalued companies with strong fundamentals, the fund aims to deliver superior returns for its investors.
The fund boasts a diversified portfolio of approximately 100 companies, with about two-thirds of investments directed toward high-conviction positions. The remaining third is allocated to new opportunities and capital recycling, allowing the fund managers to adapt to evolving market conditions and capitalize on emerging trends.
Furthermore, the fund is hedged to protect Brazilian investors from fluctuations in the U.S. dollar exchange rate. This feature adds another layer of security, allowing investors to focus on the growth potential of their investments without worrying about currency risk.
Impressive Performance to Date
The Portolan Fund has already demonstrated its ability to deliver strong performance, achieving an accumulated return of 32.8% this year. This outpaces the Russell 2000 benchmark, which posted a 20.5% gain during the same period.
The portfolio’s success is attributed to a keen focus on standout sectors such as healthcare, communication, consumer goods, and technology. These industries are poised for continued growth, driven by demographic trends, technological advancements, and evolving consumer preferences.
This unique investment opportunity allows Itaú Private Bank clients to access a promising segment of the U.S. equity market, potentially enhancing portfolio diversification and boosting overall returns. The fund’s strategic focus, strong performance, and risk mitigation features make it a compelling option for investors seeking long-term growth and capital appreciation.
Is the “valuation differential between U.S. large-cap and small-cap stocks” mentioned in the interview a typical characteristic of the small-cap market or a unique phenomenon occurring at this point in time?
## Brazilian Investors Get a New Path to U.S. Small-Cap Stocks
**(Interviewer):** Joining us today to discuss an exciting new investment opportunity for Brazilian private banking clients is Bernardo Queima, CEO of Gama Investimentos. Bernardo, welcome to the show.
**(Bernardo Queima):** Thank you for having me.
**(Interviewer):** Let’s jump right in. Tell us about this new fund and why it’s generating so much buzz.
**(Bernardo Queima):**
We’re thrilled to be partnering with Itaú Unibanco and Portolan Capital Management to launch the Portolan Equity Strategy Selection fund. This fund exclusively caters to Itaú Private Bank clients and offers them a unique opportunity to diversify their portfolios by investing in U.S. small-cap equities.
**(Interviewer):** Why focus on small-cap stocks, particularly now?
**(Bernardo Queima):** Right now, we see a particularly attractive valuation differential between U.S. large-cap and small-cap stocks, which is comparable to historical periods like the Nifty Fifty and the dot-com bubble. [[1](https://www.morningstar.com/etfs/XNAS/EWZS/quote)] This presents a significant opportunity for investors to capture potential high returns.
**(Interviewer):** The fund specifically targets companies in the $100 million to $3 billion market cap range. What makes this segment so appealing?
**(Bernardo Queima):** This segment, often referred to as “small-cap,” can be overlooked by traditional portfolios. Yet, it harbors many undervalued gems with immense growth potential. We believe this concentrated focus will allow the fund to deliver strong results for our clients.
**(Interviewer):** Thank you for shedding light on this new investment opportunity, Bernardo. It sounds like an exciting prospect for Brazilian investors seeking to diversify and capitalize on the U.S. small-cap market.
