ETF assets in Brazil have grown to approximately BRL 116 billion ($22.8), nearly tripling in the past two years as investors seek tax-efficient exposure to the country's high-yield debt markets.
BTG Pactual Asset Management and Itaú Asset Management are among the companies that have expanded their ETF operations to meet growing demand. BTG's ETF business has grown to over BRL 20 billion from approximately BRL 1 billion at the end of 2024. VanEck-backed Investo has increased its assets to over BRL 11 billion from BRL 1.7 billion in nearly two years.
Brazilian fixed-income ETFs have attracted over BRL 27 billion in new investment this year, according to capital markets association Anbima. These products typically offer lower fees and are exempt from the tax-deductible system that requires investors to pay income taxes upfront twice a year—a common practice in many traditional fixed-income funds.
The growth isn't limited to Brazil. In Colombia, ETF listings increased by 24% year-over-year, while in Chile, the number grew by 37% over the same period.
Assets in Mexican ETFs and exchange-traded products grew to $15.3 billion from $14.3 billion last year, according to ETFGI. Large institutional investors in Mexico are using these products to gain exposure to foreign equity markets, particularly U.S. tech and artificial intelligence companies, notes Ignacio Saralegui, head of portfolio solutions for Latin America at Vanguard.
The country's pension funds, known as Afores, use ETFs to access the equity market. Principal Afore, which manages nearly $26 billion in assets, noted that thematic and actively managed vehicles are driving growth, said Nestor Fernandez, the company's chief investment officer.