Additional piece:
The Rise of International Investment Funds: A Closer Look at Emerging Markets and Artificial Intelligence Stocks
In recent months, international investment funds have seen significant growth and positive returns, driven by various factors such as monetary tightening in the United States and expectations of stimulus in the Chinese economy. While all classes of international funds have experienced an increase, the standout performers have been portfolios that focus on the artificial intelligence (AI) segment, particularly shares listed on Nasdaq.
Embracing the AI Boom
The performance of portfolios concentrated in AI investments is remarkable, with a reported growth rate of over 30% in the Nasdaq 100 index. This surge in profitability can be attributed to the booming technology sector in the United States, which includes major players like Apple, Microsoft, and Nvidia. These companies have been transforming industries and pushing the boundaries of technological advancements. As a result, funds that invest in the United States have demonstrated a positive evolution of 17.46%.
Beyond the technology sector, emerging markets have also shown promising returns. Funds that invest solely in shares of companies in these regions have advanced 4.78% in June and achieved an accumulated return of 6.42% so far this year. The driving force behind this growth is the rising expectation of increased monetary tightening by the Fed and a broader stimulus plan in China.
Navigating Uncertain Times
Despite concerns over a potential recession in the United States due to interest rate hikes by the Federal Reserve, global markets have remained optimistic. The performance data as of June 14 indicates that all classes of international funds have been following the upward trajectory observed in major global exchanges. This upbeat sentiment is further supported by the belief among market players that any recession in the United States would likely be mild, resulting in a “soft landing” for the economy.
The Role of Monetary Policies
The Federal Reserve’s interest rate decisions greatly impact the performance of international funds. The tightening of monetary policies in the United States has caused investors to closely monitor their investment strategies. However, the recent decrease in the stock of credit operations, known as “reverse repositories,” has injected liquidity into the financial system and provided some relief. Moreover, the decrease in the dollar exchange rate in Brazil has created room for diversification, allowing investors to allocate a portion of their assets abroad.
The Global Landscape of Investment Funds
The United States currently holds the largest fund-of-funds industry, accounting for 49% of the global net worth, with a value of $31.6 billion. Brazil ranks eighth, contributing 3.24% or $2 billion to the global net worth. However, the trend of investing in international funds is not limited to these two countries. Investors globally are increasingly seeking opportunities in the international market, driven by factors such as the desire for higher returns, portfolio diversification, and anticipation of economic growth in emerging markets.
The Future of International Investment Funds
As the global investment landscape continues to evolve, it is essential to keep a watchful eye on emerging trends and potential opportunities. The current surge in AI stocks and the sustained growth of emerging markets present enticing prospects for investors. However, it is crucial to exercise caution and conduct thorough research when considering investments in international funds. Diversification, understanding geopolitical risks, and staying informed about global economic developments are key to achieving long-term success in the international investment landscape.
Summary:
The past few months have witnessed significant growth and positive returns for international investment funds. While all classes of international funds have seen an increase, portfolios focusing on artificial intelligence (AI) stocks, particularly those listed on Nasdaq, have performed exceptionally well. This growth is driven by the rise of the technology sector in the United States, including industry giants like Apple, Microsoft, and Nvidia.
Emerging markets have also shown promising returns, with funds invested solely in companies within these regions experiencing growth. Factors such as monetary tightening in the United States and stimulus measures in China have contributed to this growth. Despite concerns about a potential recession in the United States, global markets remain optimistic, with market players believing that any potential recession would be mild.
The Federal Reserve’s interest rate decisions have a significant impact on international funds, and recent monetary policies have injected liquidity into the financial system. Additionally, the decrease in the dollar exchange rate in Brazil has created opportunities for diversification. The investment landscape is evolving globally, with investors seeking opportunities abroad for higher returns and portfolio diversification.
Looking ahead, it is essential to monitor emerging trends and potential opportunities in the global investment market. The current surge in AI stocks and the sustained growth of emerging markets present enticing prospects. However, investors should exercise caution, diversify their portfolios, and stay informed about geopolitical risks and global economic developments to achieve long-term success in the international investment landscape.
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The process of monetary tightening in the United States and the expectations regarding the stimuli to the Chinese economy benefited investments in emerging markets, which made international funds that allocate resources in this area among the highlights of the month. However, the greatest performance continues to be in portfolios that concentrate investments in shares of the artificial intelligence segment, that is, shares listed on Nasdaq.
A report prepared by XP details the performance of various categories of international investment funds. Most of the portfolios have positive returns, reflecting the rally in the stock market in the first half of the year. This action occurs despite fears of a recession in the United States as a result of the rise in interest rates by the Fed (Federal Reserve, the US central bank).
“This year, despite the still challenging global scenario, with recessionary risks outside, we continue to see a wave of optimism wash over the markets in general. The performance data as of June 14 show that all classes of international funds are following the increase observed in the main global exchanges”, the document indicates.
The United States has the largest fund-of-funds industry, accounting for 49% ($31.6 billion) of global net worth. Brazil ranks eighth, with a share of 3.24% (US$2 billion)
Based on data from the Quantum Axis platform, the report shows that international fixed income funds have accumulated gains of 5.04% this year (until June 14) and multi-markets of 4.05%. The best performance is in the equity class, with 8.98%.
Equity highlights
Within the variable income category, the main highlight in terms of profitability are the funds that invest in the United States, with a positive evolution of 17.46%. This high is related to the technology sector: the Nasdaq 100 index, in the period, is up more than 30%.
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The values that have stood out in recent weeks are linked to the technology sector, such as Apple, Microsoft and Nvidia.
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For XP, there are three factors that explain this performance: the closing of short positions and the increase in exposure to shares of fund managers; end-of-cycle expectations for rate hikes by the Fed; and the increase in liquidity in the financial system due to the decrease in the stock of credit operations reverse repositorieswhich are a kind of repo operation.
In June, however, funds focused on emerging markets took off, portfolios that invest only in shares of companies in the region. They advanced 4.78% until the 14th, and accumulated a return of 6.42% in the year.
“The performance of these funds was driven by rising expectations of increased monetary tightening from the Fed and a broader stimulus package in China,” according to the report.
Even so, the American funds gained more: 5.05% in the month. What is driving stocks higher is the fact that market players believe that even if the United States faces a recession, it will be a mild one, that is, a soft earth (Soft landing).
“The market has interpreted that even with the interest rate in restrictive territory and the possibility of an additional increase of 0.5 pp until the end of the cycle, the United States should face a slight recession that should not translate into multiple compression of listed companies ”, the report explains.
Currently, the interest rate in the United States is in the range between 5% and 5.25% per year.
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For XP analysts, the drop in the dollar exchange rate in Brazil leaves room for greater diversification of the portfolio, with the allocation of part of the assets abroad. “The recent movement is justified by a weakening of the dollar worldwide and an improvement in the outlook for Brazil corroborated by better-than-expected data and fewer uncertainties on the fiscal front.”
Related
Juros nos EUA e estímulos na China ajudam fundos de emergentes, mas techs americanas sobem mais
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