Galapagos Capital has launched GLMP11, presented as the first Brazilian clean energy ETF with exposure to shares of local companies. The fund begins trading on the B3 stock exchange with R$ 20 million raised by the asset manager and will have BNDES as its anchor investor.
The development bank will make an investment equivalent to the amount raised by Galapagos. In practice, if the R$20 million is confirmed along with the other funds raised, BNDES's participation will increase the fund's initial equity to R$40 million.
GLMP11 was one of five products selected in a call for proposals from BNDES (Brazilian Development Bank) aimed at developing the Brazilian ETF market. The bank's participation seeks to provide scale and liquidity to the fund, facilitating the trading of shares and the entry of new investors.
How does an ETF work?
ETF is the acronym for index fund. Unlike a traditional fund, where a manager freely chooses the assets, an ETF seeks to track the performance of a benchmark index.
Shares are bought and sold on the stock exchange in a similar way to stocks. Therefore, the investor does not need to purchase individual shares of each company. By buying a share of GLMP11, they gain indirect exposure to a portfolio comprised of different Brazilian companies related to clean energy.
This does not mean, however, that the investment has guaranteed profitability. The value of the shares varies according to the performance of the stocks in the portfolio and market conditions. There may also be differences between the ETF's return and the index's performance, due to administration costs and operating expenses.
In the case of GLMP11, the management fee will be 0,20% per year. The product will be accessible to both individual investors and institutions, such as asset managers and pension funds.
GLMP11 will track the Teva Clean Energy Equity Index, developed and calculated by Teva Indices. The portfolio includes Brazilian companies in power generation, transmission and distribution, as well as companies in the biofuel chain, including the sugar and ethanol segments.
The composition aims to represent different areas involved in the energy transition. Therefore, the fund will not only invest in companies responsible for generating renewable energy.
The portfolio also includes transmission and distribution companies, responsible for the infrastructure needed to transport and deliver electricity to consumers. In this way, the ETF seeks to track the energy transition chain more broadly, without concentrating its strategy on a single technology.
Criteria for selecting companies
To be included in the index tracked by GLMP11, companies must meet criteria for liquidity, market capitalization, and financial health. Among the requirements are a market capitalization exceeding R$ 5 billion and an average trading volume above R$ 100 million per month.
The methodology also limits each company's participation to 15% of the portfolio. This measure aims to prevent the fund's performance from becoming overly dependent on the shares of a single company.
The composition will be rebalanced every six months. In this process, the index may change the weight of companies, include new stocks, or remove companies that no longer meet the established criteria.
Rebalancing does not depend on a one-off decision by the investor. Since the ETF replicates the index, adjustments are incorporated into the fund's portfolio according to the rules defined by the methodology.
Fund seeks to expand access to energy transition.
GLMP11's strategy stems from the expectation that the energy transition will continue to demand investments in renewable generation, transmission, distribution, and biofuels over the coming years.
Para a Galapagos, o ETF oferece uma forma de investir nessa tendência por meio de empresas brasileiras. A companhia global de investimentos também avalia que a participação do BNDES poderá ajudar o produto a alcançar um patrimônio compatível com a entrada de investidores institucionais.
The fund will have the ESG seal from Anbima. According to BNDES, the initiative combines support for the energy transition with the strengthening of the capital market, allowing different investor profiles to access companies related to the decarbonization process of the economy.
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