According to a survey by the World Federation of Exchanges, in October, about 40% of the financial volume traded in the New York exchanges did not result from stock trading. This percentage refers to the purchase and sale of Exchange Traded Funds (ETFs). There are about 3,000 of them worldwide, but in the Brazilian market, there was only one fund that fit the profile: the Bovespa Brazil Indexes Shares (PIBBs), released by the BNDES in 2004. The situation changed in the last week of November, when BM&F Bovespa and Barclays bank announced the launch of three exchange traded funds.

Each ETF has a market index as a benchmark. In Brazil, index funds are regulated by Instruction 359 of the Brazilian Securities and Exchange Commission (CVM), which requires that a minimum of 95% of assets be in conformity with the reference portfolio. “The remaining 5% can be invested in public bonds, but what's normally done is the ETF reserves only a small percentage to keep as cash”, explains Marcelo Allain, director at Barclays, the world's leading bank in listed investment fund structuring.

The indexes chosen by the institution were Ibovespa, Mid-large Cap and Small Cap. The ETFs benchmarked by the former two charge administration fees of 0.54%, while ETFs with shares from small companies collect 0.69% of assets. Looking at it this way, these portfolios are very similar to equity funds, but Allain mentions some differences. In an ETF, the investor knows how much the share is worth immediately, and not on the next day, as with off-exchange portfolios. Other requirements are safety and transparency, given that they are neither leveraged nor active, i.e., they merely follow the index's exact percentage. “These are some of the reasons that pushed the participation of these funds in the traded volume in New York from 29%, at the beginning of the year, to 40% during the crisis”, says the executive product director at BM&F Bovespa, Murilo Robotton.

The product also allows institutional investors to perform a kind of arbitrage on the stocks that comprise the basket and the ETF. Because it is open, the fund also admits the creation of new shares by the market. Thus, an investor just needs to set up a stock basket identical to the one followed by the ETF, give it to the broker, and receive a part of the fund. Such an operation is interesting when there is a discrepancy between the value of the index being followed and that of the share. This is an instrument targeted at institutional investors, for the minimum lot is 100 thousand shares, which would mean R$ 3.6 million — in the Ibovespa ETF's case —at late November prices. After a suggestion by Barclays, the CVM is allowing up to 5% of the total amount to be paid in cash for cases where the shares involved have low liquidity and high prices.