A survey by B3 examines international references and points out lessons from advanced markets that can guide the expansion of these instruments in the country.
ETFs, exchange-traded index funds, have been gaining traction among investors and have the potential to strengthen both portfolio diversification and the development of the Brazilian capital market.
“This is a product that promotes a structural change by offering access to sophisticated strategies with reduced costs, liquidity, and transparency. The assets of this industry reached R$ 75 billion, and only this year, we registered 53 new listings on B3. This means that practically every week we have managers bringing a new ETF for trading for different profiles of investors,” says Luiz Masagão, vice president of Products and Clients at B3.
The number of individual investors applying to these funds jumped from 42 thousand to 666 thousand in seven years. About 10% of Brazilian investors own at least one ETF, a proportion still far from markets like the United States, where half of the population invests, and Europe, where this percentage reaches 20%. In the US, the volume of listed ETFs — about 4,000 — already exceeds that of stocks. In Brazil, there are 162 ETFs available.
Observing these markets indicates not only local potential but also clear directions for the growth of the segment. An independent study conducted under the IFC-Milken Institute Capital Markets Program at Georgetown University identified five key factors for the global expansion of the ETF investor base: long-term culture, incentives for advisors and brokers, user experience, diversity and promotion of products, and tax neutrality.
1) Long-term investment culture
In the United States, 77% of investors use ETFs for retirement purposes, supported by a historically low-interest-rate environment that favors accumulation in variable income.
In Brazil, with a distinct macroeconomic dynamic, fixed-income and cryptocurrency ETFs are gaining relevance. B3 promotes new listings in different asset classes and offers analysis tools to support investor decisions. Among them is the ETF comparator on the Bora Investir portal, which gathers data from local funds and from BDRs of ETFs that replicate foreign indices.
2) Incentives for advisors and brokers
The fee-based model, which compensates advisors with a fixed fee instead of commissions per product — a predominant practice in the US — encourages the recommendation of ETFs. Approximately 70% of American professionals recommend these funds to their clients.
In 2023, 71% of the revenue of these advisors came from fee-based, a percentage that may reach 76% in 2025. The change relies on factors such as revenue predictability, greater alignment with client objectives, and differentiation in the service provided.
The migration to this model in the US took about six years to consolidate, following three fundamental steps:
Plan: evaluate portfolios, estimate impacts on revenue and return over time;
Communicate: clarify to the client the differences between the models;
Migrate: start the change with a restricted group of clients, gradually.
In Brazil, resolution 179 from CVM tends to increase transparency regarding remuneration and may accelerate the adoption of fee-based.
3) User experience
American and European brokers use technology to facilitate the creation of diversified portfolios, in two main fronts: "Model Portfolio" and "ETF Savings Plan."
In the Model Portfolio, algorithms suggest combinations of ETFs based on objectives, income, experience, risk tolerance, and investment horizon. The allocation is done only once, encouraging beginners to start investing.
In the ETF Savings Plan, common in Europe, the investor themselves defines the portfolio and makes automatic monthly contributions. The average amount is 136 euros. In 2024, there were 10,8 million active plans — 88% in Germany — totaling 17,6 billion euros. The projection for 2028 is 32 million plans and 64,3 billion euros.
4) Diversity and promotion of ETFs
The widespread promotion of ETFs in developed markets — in transportation, airports, and events — reinforces the public's familiarity with the product. The expansion of active ETFs is a highlight: in 2024, they represented 77% of new listings in the US.
In Brazil, B3 is expanding the variety of available classes, going beyond stock indices. The exchange was one of the first in the world to list cryptocurrency ETFs in 2021. In recent years, it has also authorized funds with dividend distribution and hybrid ETFs that combine fixed and variable income. Active ETFs do not yet exist in the country, but the topic is under analysis.
5) Tax neutrality
In consolidated markets, investing via ETFs or directly in the underlying assets entails virtually the same tax treatment, which simplifies the investor's choice. In Brazil, there are still relevant differences between the modalities.
Equity ETFs are taxed on capital gains and dividends, regardless of the negotiated amount, while stocks are exempt from taxes for monthly sales of up to R$ 20,000 and dividends are exempt for individuals.
Fixed-income ETFs already offer advantages over banking products and traditional funds: they follow regressive rates of 25% to 15%, with no IOF incidence, and do not have come-cotas.
"ETFs have the potential to transform the investment market through simplicity and a variety of options, allowing investors to access different asset classes with just a few clicks. The industry in Brazil is only 21 years old. It has progressed significantly, but there is still considerable room for growth," concludes Luiz Masagão.
The article Five paths for the future of ETFs in Brazil was first seen on BeInCrypto Brazil.