When President Trump’s tariff announcement sent shockwaves through the global economy, a lot of Brazil’s asset management industry rightly felt that the country had gotten off lightly. The real strengthened against the dollar, reaching its highest level since October 2024, and Brazil’s benchmark stock index even crept up slightly.
That feeling continued right up until the President established additional tariffs on the country. Still, fund managers who sensed opportunity at 10% shouldn’t be too quick to abandon it at 50%.
That’s especially true now that the adaptation period for Resolution No. 175 – Brazil’s new investment fund framework – is over. Funds that have made themselves compliant with the framework are potentially better placed than many of their counterparts around the world.
Brazilian asset management’s untapped potential
In the past, economic volatility would see investors seeking safety in established markets like the US. Today, US assets are no longer viewed as the safe haven they once were. Despite a US market rebound once most of the tariffs were paused, many of the world’s leading fund managers are telling investors to look abroad.
Interest in Brazil is growing, and the country is increasingly seen as a relatively safe harbor for overseas investments. By the end of May this year, foreign investors had injected R$21.5 billion into B3 – the highest monthly inflow since 2019.
Brazilian fund managers should be doing everything they can to further attract overseas investors searching for diversification.
That starts with accessibility. Despite regulatory changes further opening the market to overseas investors, many Brazilian funds remain poorly connected to the international markets, impacting global and domestic investors
Compliance with CVM Resolution No.175 dramatically expands outbound investment limits. Institutional investors can now invest 100% of their net assets overseas, up from 20%. Retail investors, previously barred, can now do the same.
Cost pressures can’t be ignored
Despite the tariff pressures, the Brazilian fund market is ready to wake up. However, much of the progress risks being undermined if funds do not contain rising costs and operational inefficiencies.
The industry recognizes CVM Resolution No.175 as a positive step, but the transition has increased operational costs for many. This coincides with long-standing inefficiencies in Brazil’s back-office operations, where manual processes, such as proprietary portals and email, batch trade processing and the uniquely Brazilian challenges of outages and connection issues, are still all too common. Meanwhile, the uncertainty in the US is also going to pressure margins.
In a new regulatory world, where standardized fund documentation must clearly outline all fees, passing these extra costs on to investors is a much harder task.
Many of these obstacles can be remedied by modernizing fund infrastructure – with cost-reduction effects already proven in the UK, Australia, Luxembourg, and Singapore. In Brazil, fund networks can play an important role by connecting the local asset management market to the global ecosystem.
Automation as alpha
Brazil is uniquely well positioned to seize the opportunities the current US volatility has created. The outdated infrastructure much of it runs on, however, makes it particularly vulnerable to any margin pressures.
What we call “operational alpha” – that is, increasing competitiveness through straight-through processing, API-based connectivity, and cloud infrastructure – is the solution. Much of the world’s asset management is plagued by the same inefficiencies, with firms in more mature markets often running on far older legacy systems. By executing operational alpha now, Brazilian funds could leapfrog them entirely.
With the heavy lifting of complying with CVM Resolution No.175 out of the way, fund managers’ sights should now be trained on implementing that solution and preparing to compete globally.
First published in Valor Econômico October 2025
