Nubank and the Brazilian stock exchange launch the first dividend-paying ETF in the Brazilian market
The ETF follows the index Ibovespa Smart Dividendos B3, developed jointly by the institutions, which includes companies listed with recurring dividend payments over time in the portfolio
Sep 28 , 2023
São Paulo, September 28, 2023 – In an unprecedented move in the Brazilian investment market, Nubank announces today the launch of the first ETF (exchange-traded fund) in Brazil that pays monthly dividends to shareholders: Nu Renda Ibov Smart Dividendos (NDIV11). The new product results from a partnership between Nubank’s investment fund manager, Nu Asset Management, and B3, the Brazilian stock exchange, and is now an option for any investor without any mandatory affiliation with Nubank or its broker, NuInvest. Therefore, any individual – upon suitability assessment with the affiliated broker – or institutional investor can invest in the new ETF.
The partnership between Nu Asset and B3 was established to create the innovative Ibovespa Smart Dividendos B3, the first derivative index of the Ibovespa B3. The new index will include companies from Ibovespa that stand out in dividend payments to shareholders.
The index considers companies from Ibovespa B3 that pay the highest dividends relative to the share price. This criterion will also be used to weigh the stock’s importance in the portfolio, in addition to the recurrence and lower variations in dividend payments. This means that the companies that consistently pay higher proportional values over the years will have more weight in the portfolio.
The development of ETF offerings in Brazil follows a trend already observed on a global scale. The globally invested volume in ETFs has shown a 20% annual growth over the last two decades, with approximately USS 10.6 trillion (approximately R$ 53 trillion) under management as of July 2023, according to data collected by ETFGI, an independent research and consulting platform for ETFs. In the Brazilian stock exchange alone, the invested volume in ETFs was nearly R$ 45 billion in August, according to B3’s Monthly ETF Bulletin.
“With this new product, Nubank takes the leading role in the evolution of exchange-traded funds in Brazil. The unique formula of paying dividends through the investment in ETFs and the partnership with B3 for the development of Ibovespa Smart Dividendos B3 combines the innovation DNA that has marked our trajectory in the last 10 years and the efficiency desired by investors,” says Andrés Kikuchi, executive director of Nu Asset Management.
“The expansion of the capital market and the increase in the number of investors require us to expand the offering of products for portfolio diversification. It is symbolic to have the first derivative index of Ibovespa B3 in the year it celebrates its 55th anniversary. In addition to giving visibility to companies that are market references and also good dividend payers, the Ibovespa Smart Dividendos is another investment thesis that we offer to the market, consolidating B3 as the main index provider in Brazil,” says Henio Scheidt, Index Manager at B3.
Nu Ibov Smart Dividend (NSDV11): automatic reinvestment of dividends
Beyond Nu Renda Ibov Smart Dividendos (NDIV11), Nu Asset is launching another ETF replicating the Ibovespa Smart Dividendos B3 index: Nu Ibov Smart Dividendos (NSDV11). It differs from the first one by reinvesting the dividends in the ETF itself. NSDV11 is equally available to any investor (individual or institutional).
“Within a diversified portfolio, the investor can compose their strategy with passive income but also look into an even broader time horizon. By reinvesting the dividends in Nu Ibov Smart Dividendos, the potential return with the appreciation of the security over time is higher,” observes Kikuchi.
Ibovespa Smart Dividendos B3: positive variation of 142% over 10 years
The first portfolio of the Ibovespa Smart Dividendos B3 is composed of 21 companies and is valid until December 29, 2023, when it will be rebalanced. This process occurs every four months, like other B3 indexes, to align the composition with the criteria established in the methodology. The portfolio can be accessed on the B3 website.
If it had existed since 2013, the Ibovespa Smart Dividendos B3 would have accumulated a positive variation of 142% until the end of August. The Ibovespa B3 had a positive variation of 87% in the same period.
The initial minimum investment amount for both Nubank’s ETFs is R$ 100, corresponding to one share, and it may vary over time according to the index’s fluctuations. NDIV11 and NSDV11 have a 0.5% annual administration fee, with no performance fee charges. Both ETFs are subject to capital gains tax upon sale and if there is a capital gain. In the case of the dividend-paying ETF, there is a 15% taxation on the value of dividends paid to shareholders, which the fund administrator will directly collect. Both new Nubank-listed ETFs have a two-business-day liquidity.
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