Brazilian Investors Get Access to U.S. Small-Cap Equities with New Fund
Itaú Private Bank clients are getting a new opportunity to diversify their portfolios with exposure to the U.S. small-cap market.
A new partnership between Itaú Unibanco, Gama Investimentos, and Portolan Capital Management has resulted in the launch of the Portolan Equity Strategy Selection fund. This hedged fund aims to protect Brazilian investors from currency fluctuations while providing them with access to a unique and potentially rewarding investment strategy.
Focus on Undervalued Gems
The fund strategically targets companies within the Russell 2000 index, specifically those with market values between $100 million and $3 billion. This means investors will gain exposure to a segment of the U.S. market often overlooked by larger funds, which tend to focus on mid-cap and large-cap companies.
Portolan’s discerning approach involves constructing a diversified portfolio of approximately 100 companies. About two-thirds of the investments are allocated to positions the fund managers believe have a high likelihood of strong performance, while the remaining third is dedicated to exploring emerging opportunities and strategically recycling capital.
Strategic Timing and Impressive Returns
Bernardo Queima, CEO of Gama Investimentos, emphasizes the timely nature of this launch. “The current valuation differential between small-cap and large-cap companies is one of the largest in recent decades, comparable to periods like the Nifty Fifty and the dot-com bubble,” he stated.
This indicates that investors may be presented with an attractive entry point into the small-cap market.
The Portolan fund itself has already delivered strong results, achieving an accumulated return of 32.8% this year, significantly outperforming the Russell 2000 benchmark, which posted a 20.5% gain.
Promising Sectors for Growth
The fund’s portfolio currently features standout sectors such as healthcare, communication, consumer goods and technology. These industries represent areas of potential growth, driven by innovation, changing consumer preferences, and demographic shifts.
The launch of this new fund provides a valuable opportunity for sophisticated Brazilian investors to tap into the exciting world of U.S. small-cap equities. With its diversified portfolio, experienced management team, and strong track record, the Portolan Equity Strategy Selection fund could be well-positioned to capitalize on the continued growth potential of this dynamic market segment.
What are the potential benefits for Brazilian investors to diversify their portfolios into the U.S. small-cap market?
## Interview: New Fund Opens U.S. Small-Cap Market to Brazilian Investors
**Host:** Welcome back to the show. Today we’re discussing a new investment opportunity for Brazilian investors: the Portolan Equity Strategy Selection fund. To learn more, we’re joined by Alex Reed, a financial analyst specializing in the U.S. market.
**Alex Reed:** Thanks for having me.
**Host:** So, tell us, what exactly is this new fund and why is it generating buzz?
**Alex Reed:** This is a hedged fund launched through a partnership between Itaú Unibanco, Gama Investimentos, and Portolan Capital Management. [[1](https://finance.yahoo.com/quote/ITUB/)]It’s designed specifically for Brazilian investors wanting to access the U.S. small-cap market – something traditionally harder to do.
**Host:** What makes small-cap U.S. equities interesting for Brazilian investors right now?
**Alex Reed:** The Russell 2000 index, which this fund tracks, focuses on companies with market values between $100 million and $3 billion. This segment is often overlooked by larger funds, meaning it can harbor hidden gems – undervalued companies with significant growth potential.
**Host:**
That sounds promising, but what about the risks associated with investing in the U.S. market from Brazil? Currency fluctuations can be a major concern.
**Alex Reed:** Absolutely. That’s where the “hedged” aspect comes in. The fund is designed to protect Brazilian investors from those fluctuations, making it a more stable and predictable investment.
**Host:** Who would you say this fund is best suited for?
**Alex Reed:** It’s ideal for Itaú Private Bank clients looking to diversify their portfolios and who are comfortable with a higher risk, higher potential reward investment strategy.
**Host:** Thank you for shedding light on this exciting new opportunity for Brazilian investors, Alex Reed. We appreciate your insights.
**Alex Reed:** My pleasure.