Due to the easing of limits by the Brazilian Securities and Exchange Commission (CVM) in regards to investment from aboard, portfolio managers and investors will now be able to increase the diversity of their portfolios, at least according to Fitch Ratings.
With asset classes gaining new exposure geographically, Fitch Ratings has said that it believes that portfolio managers will have access to more mechanisms to allow more allocation implementation than what was previously possible. This should, according to Fitch Ratings, vastly help the efficiencies of portfolios by complementing the available strategies local markets survive on.
There is one aspect of concern for Fitch Ratings, however. The CVM reaffirmed the asset manager's fiduciary duty and its requirements for them to have the correct amount of knowledge of the markets and products to be invested in, thereby strengthening the CVM’s control over investments in foreign assets.
Following up, Fitch Ratings stated that it believes that those involved in investment decisions -- positions such as CIOs, portfolio managers and analysts -- may need some time to accumulate more experience in these asset classes they are now exposed to through more market cycles. This way, Fitch Ratings believes, there will be an improvement in the quality of analysis and strategy coverage.
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