The month of February was not very good for real estate funds. After falling 1.6% in January, the Ifix ended the last month down 0.45%. We live in a scenario that is not very good for variable income, so is it really worth investing in real estate funds?
The prospect is that interest rates will remain at higher levels and that it will continue to impact FIIs’ prices. With the scenario very turbulent, Itaú BBA made changes to its recommended portfolio of real estate funds for the month of March, taking the opportunity to add new securities and dilute positions in others.
What we will see in this article:
The best real estate funds to invest
The selection was made by Itaú BBA and for March, the bank’s recommended portfolio has 12 assets. Four of them are from the financial assets sector and three are from logistics warehouses. The other five are from the urban income sector, mixed, corporate buildings, hybrid and shopping malls.
In addition, Itaú BBA analysts reported that they remain optimistic for the real estate market, thinking regarding the medium and long term. But in the short term, uncertainties regarding the political scenario and also fears of fiscal risks can cause volatility.
- CSHG Urban Income (HGRU11)
Sector: Urban rent
Dividend yield: 8,9%
- Vinci Logistics (VILG11)
Sector: Logistics warehouses
Dividend yield: 7,3%
- Bresco Logística (BRCO11)
Sector: Logistics warehouses
Dividend yield: 8,0%
Sector: Logistics warehouses
Dividend yield: 9,2%
- Kinea Real Estate Income (KNRI11)
Sector: Mixed
Dividend yield: 8,3%
Sector: Corporate slabs
Dividend yield: 8,5%
Sector: Hybrid
Dividend yield: 7,2%
Sector: Malls
Dividend yield: 11,3%
- CSHG Real Estate Receivables (HGCR11)
Sector: Financial assets
Dividend yield: 14,2%
- Kinea Real Estate Income (KNCR11)
Sector: Financial assets
Dividend yield: 12,1%
- Kinea IQ Price Index (KNIP11)*
Sector: Financial assets
Dividend yield: 12,0%
*This fund is intended for qualified investors only.
- Kinea High Yield IQ (KNHY11)*
Sector: Financial Assets
Dividend yield: 13,3%
*This fund is intended for qualified investors only.
What are real estate funds?
After all, what are real estate funds? They are a form of joint investment and negotiated through quotas. Investors come together with the aim of investing their money in various types of assets related to this sector.
The investment that can be part of the fund’s portfolio can be both physical real estate and fixed income securities linked to the market, such as real estate receivables certificates (CRI) or real estate credit letters (LCI). Investments are managed by a professional manager.
The manager is responsible for making the contributions, following the previously established strategy. While investors do not need to spend time on these activities. It is enough to evaluate the FII and buy the shares, while the portfolio is in charge of the manager.
To make your contributions to real estate funds, you need to acquire shares of whatever interests you. As they are traded on the stock exchange, you can acquire them through your investment bank’s home broker.
From then on, you will be able to benefit from any positive results from the fund. They can happen through the appreciation of shares or the distribution of profits in the form of dividends. Thus, it is possible to receive a passive income proportional to your participation in shares of the fund.
Check here the difference between paper background x brick background:
Types of real estate funds
1. Brick backgrounds – one of the most famous, is also known as income funds. Composed of physical real estate assets. The investor who invests in brick funds will have his income through the rental of these properties. For example:
- Malls;
- Corporate Slabs;
- Logistics Warehouses;
- Hotels;
- Educational real estate;
- Hospitals;
- Bank agencies;
- Residential real estate.
2. Paper backgrounds – are also called receivables funds, composed, in general, of CRIs, LCIs, LHs, CEPACs, FIDCs and quotas of other FIIs that are linked to letters and certificates of the real estate environment. This type of fund has sector contracts, which are paid for by investors’ participation through the purchase of quotas. The fund’s monthly profit is distributed through earnings. They are considered safe because the certificates that compose them are linked to fixed income.
3. Funds of Funds (FOFs) – are funds that acquire shares in other funds. Therefore, they work as a mix of strategies with several funds in one. This alternative can reduce risks and manage to balance gains, since it mixes products and tactics. When buying shares of FOFs, the investor activates several other funds. The discouraging part is the double taxation: the administration fee for the FOF and the funds that compose it.
4. Development funds – focused on making real estate construction feasible, investors invest their money in real estate projects that are under development. Afterwards, the profit comes from the sale or rent of these properties with the finished construction. Therefore, it is the most risky. Depending on numerous factors such as: progress of the work, deadlines and sales.
5. Hybrid Funds – are investments that mix characteristics of others. The components are brick and paper, that is, having both physical real estate and real estate contracts. Administrators combine products and even more possibilities. Of course, in this case, the proportion of the fund’s portfolio follows the momentum of the market. With the high Selic, the paper FIIs make up the majority, and in the valuation of real estate, the brick ones saw the majority, for example.
So, how to invest in FIIs?
Interested in investing in real estate funds? Now you understand what FIIs are and what are the main types available on the market. Now, it’s time to learn how to make your contributions — if real estate funds make sense for your strategies.
See 4 simple and practical steps to follow here.
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