Brazil election update

Following the outcome of Brazil’s presidential election, we want to reassure you that exposure to Brazil across AJ Bell’s Funds and Managed Portfolio Service is limited and diversified. Our current look-through exposure is up to 1.1% of the relevant passive equity allocation in portfolios, with lower risk profiles holding a lower exposure. Active portfolios held a slightly higher allocation as of the end of September, however these managers may have altered positions in the lead-up to the election.

Luiz Inácio Lula da Silva won the runoff with 51.8% of the vote. The result was not the outcome markets had expected following the first round, so Brazilian equities and the real may experience some short-term volatility as investors reassess the fiscal and policy outlook. Trading in the iShares MSCI Brazil ETF in London indicates a sharp initial fall, although Brazil’s domestic market had not yet opened when this note was prepared.

For AJ Bell investors, the key point is that Brazil represents only a small part of our broadly-diversified portfolios. We do not expect the election result, in isolation, to have a material impact on overall portfolio outcomes. The Investment Team is monitoring developments and will assess any longer-term implications through our established investment process.

Source: Morningstar Direct

Past performance is not a guide to future performance and some investments need to be held for the long term.