Choosing a Real Estate Investment Fund (Brazilian equivalent of REIT) investment with active or passive management depends on the expected performance and potential returns desired by each investor. It’s essential to understand how each approach works to determine whether you prefer a fund aiming to outperform the benchmark (active management) or one designed to replicate the benchmark’s performance (passive management).
What Is Active or Passive Management in Real Estate Funds?
1. What Are Actively Managed Funds?
The key distinction of actively managed REITs lies in the fact that decisions and investment strategies are made by a specialist fund manager. In this case, the portfolio undergoes regular reviews and assessments to identify opportunities for optimization, aiming for higher financial returns while adhering to the fund’s investment strategy.
2. What Are Passively Managed Funds?
In contrast, passively managed funds typically replicate a benchmark index, such as the CDI or Ibovespa. These funds are structured to track predetermined indices, focusing on stability rather than outperformance.
3. Active vs. Passive Strategies
Active management tends to draw more attention due to its potential for higher returns. However, it requires greater investment knowledge to manage risks effectively. For beginners, it’s recommended to start cautiously with passive income strategies to avoid surprises and potential losses. Alternatively, seeking professional help for asset management is a wise approach.
Investment Funds
Investment funds are a simple and accessible option for investors looking to enter the financial and capital markets with the guidance of a professional manager. These funds can focus on specific strategies or combine investments across various markets, diversifying in areas such as interest rates, currencies, equities, real estate assets, derivatives, and international assets. This approach aims to achieve returns that exceed benchmark indices, as seen with passive management.
ETFs (Exchange Traded Funds)
ETFs, or Exchange Traded Funds, are an example of passive management in the stock market. For instance, Ibovespa ETFs consist of shares from various companies in the index and are traded like common stocks on the stock exchange.
Which Funds Have the Most Recommended Strategies?
When selecting investment funds to include in your portfolio, it’s essential not only to focus on return predictability but also to adopt a strategic perspective on the fund manager’s decisions. Always ensure the information presented in reports is clear and transparent, and the fund’s performance results are well-documented.
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