All three of the Foundation’s plans exceeded the actuarial target in the period
FUNCEF’s total investment portfolio reached a return of 6.47% in 1Q22. All benefit plans exceeded the actuarial target (4.56%), with a total surplus of R$ 2.12 billion, the highest ever recorded by the Foundation for a first quarter.
This surplus generated corresponds to the amount in excess of what is necessary to cover the Foundation’s current and future commitments, being essential to enable further reductions in the equating rates in force in the coming year.
The result of investments reached 5.56 billion, a value 21% higher than that obtained in the same period last year, driven by the recovery of the Stock Exchange. This raised the volume of funds guaranteeing the plans (RGPB) to R$ 91.21 billion.
“Short-term swings are part of the normal market cycle. We acted quickly to capture opportunities in the quarter. Even more important is that we continue to strengthen the governance of the Foundation to ensure that these gains are extended over the very long term, which is our focus”, said FUNCEF president Gilson Santana.
In the quarter, the Foundation maintained its protection strategy, which migrated a portion of its equity funds to fixed-income assets with returns above the actuarial target, in the wake of the current cycle of high interest rates.
It also reinvested in government bonds the proceeds from the sale of properties included in the divestment plan, which includes 94 assets by 2025, mainly land, commercial buildings and hotels with low profitability.
In the consolidated portfolio, the share of fixed income reached 64.30%, 9.16 percentage points higher than in the same quarter of 2021.
Equity investments, significantly affected in the second half of last year, showed recovery in 1Q22, with its benchmark index, the IBrX 100, accumulating a rise of 14.89% in the period, against a decline of 0.72% in the previous year . One of the highlights was the portfolio of stocks chosen (stock picking), which performed above this index.
In addition, the Foundation invested BRL 86 million in Statkraft Energias Renováveis, in which it holds an 18.7% stake, an amount that should add up to another BRL 112.6 million throughout 2022.
FUNCEF’s resources, estimated at a total of R$ 279 million, are intended for the construction of the wind farms in Ventos de Santa Eugenia and Morro do Cruzeiro, in Bahia, which should more than double the company’s generating potential.
New Plan and REB
Novo Plano and REB, FUNCEF’s youngest plans, once again reached the actuarial target, with profitability of 5.58% and 6.26% in 1Q22.
FUNCEF added long-term government bonds linked to inflation at rates above the target to its portfolios. The novelty was the addition of Treasury bills with a maturity of up to five years as part of a liquidity strategy.
“The idea is to have flexibility so that, in an eventual fall in variable income, as happened in April of this year, the Foundation can repurchase selected assets, with an appropriate profile for its portfolio and good potential for appreciation”, explained the Investments director, Samuel curly
In the REG/Replan, a mature plan with a shorter time horizon, the Foundation took advantage of the stock market’s recovery in 1Q22 to sell securities and reinvest the gains in long-term government bonds. Both types had a return of 6.84% (Settled) and 6.89% (Non-Settled), the highest among the Foundation’s plans in the period.
“These bonds have yields slightly above the target and make the results more predictable. Whenever the variable income has a good performance, we will migrate part of it to guarantee the perpetuity of this gain”, observed Crespi.
FUNCEF also implemented a fixed-income-to-market strategy in REG/Replan. In addition to the bonds marked on the curve, i.e., which will necessarily mature in 15 or 20 years, the Foundation has added short-term bonds to the portfolio, aiming to capture gains from the volatility of the Selic rate and allow possible reinvestment in variable income.
real estate assets
An important movement for the Settled and Unsettled were the sales of real estate assets. By the end of March, the Foundation had approved 15 sales proposals and concluded 14 negotiations for a total amount of BRL 216 million, with emphasis on two plots of land in the Northwest sector, in Brasília, and a 50% stake in the Hotel Royal Tulip Brasília.
“The strategies are based on market indicators. We make constant assessments of scenario and opportunities. There is a strong moment of recovery and expansion in the real estate market, which translates into the demand for land, warehouses ready for e-commerce distribution and logistical properties, with capacity for data centers”, said the director of Real Estate and Corporate Participations, Almir Alves. Junior.
With the recent lease of three properties, one in Vila Velha (ES) and two in Barueri, in Greater São Paulo, FUNCEF achieved 100% occupancy of its assets in the logistics segment.
The two REG/Replan modalities showed a surplus in 1Q22. The Balanced generated R$ 772 million and the Unpaid, R$ 1.38 billion. In the latter case, the result was driven by the actuarial revaluation motivated by the adequacy of the Non-Paid to CGPAR Resolution No. 25/2018. This review led to the average cut in the rates of the 2015 and 2016 equations of 76% for assets and 70% for retirees and pensioners.
In addition to the adjustment of the Unpaid, FUNCEF made other important governance advances in 1Q22.
Highlights include the implementation of performance indicators and an accreditation system for the selection of law firms, in addition to a Related Party Transactions Policy, which reinforces the monitoring of potential conflicts of interest and the transparent disclosure of information.
The Foundation also responded to a request from the assisted participants and signed a new benefit payment agreement with the INSS valid for five years.
FUNCEF Social Communication