Brazil is increasingly stealing the limelight in the wealth management industry, a fact gaining more attention from global firms, as this report shows.

Brazil, home to one-third of Latin America’s wealthy population, is increasingly stealing the limelight in the asset management industry, as the eurozone and the US are going through a rough patch, and some investors think Chinese stocks are in it for a hard landing.

Many of the West’s big banks have in recent weeks reported they will be making large job cuts, with wealth management being, in many cases, a light in the tunnel. And new research from Strategic Insight, titled All Eyes on Asia and Latin America for Strategic Growth, shows that net cash flows mainly came from Asia and Latin America, particularly from Brazil.

Brazil is not just the biggest economy in Latin America, it also has the highest number of high net worth individuals in the region, according to Wealth-X. The lion’s share of the local assets of nearly $1 trillion are managed by domestic players like Banco do Brasil, Itau Unibanco and Bradesco, but Strategic Insight reports that JP Morgan, Credit Suisse, BNP Paribas, BlackRock and Legg Mason are cracking into the market. BNY Mellon, Santander and HSBC are some of the international big hitters in local asset management.

Jamie Maak, Strategic Insight’s client service director in London, said in the report that about three-quarters of her recent conversations with European asset managers and industry experts were centred on Asia or Latin America - and Brazil in particular. The research company said that it has seen a similar trend in the US.

Emerging market bridges

Strategic Insight singles out fixed income as one of the many reasons why Brazil is getting the industry’s attention. Fixed income flows in Brazil were $30 billion in June, according to the study.

In its quarterly results, Swiss giant Julius Baer logged strong growth in Latin America through its recently-acquired stake in Brazil’s wealth manager GPS, allegedly the country’s largest independent wealth manager with $5 billion in client assets.

Significantly higher performance fees from Hedging-Griffo, the Brazilian fund manager, contributed to Credit Suisse’s 25 per cent jump in net revenues year-on-year from asset management in its latest financial results. Credit Suisse has owned 50 per cent plus one share of Hedging-Griffo since 2006.

The report uses the phrase “emerging market bridges” to describe how Japan’s Nomura Asset Management had its biggest success last year with its multiple high-yield fixed income offerings linked to the Brazilian real. Brazil has the largest Japanese population outside Japan.

The next targets for global firms are thought to be the offshore pension markets of Chile, Peru and Columbia, but local players are not standing on the sidelines. Earlier this week, Itau, the Brazilian private bank, entered a partnership with Chile's Munita, Cruzat & Claro​​, which will create a new wealth management company. The joint venture will focus on wealthy clients in the Chilean market under the name of the local company, which manages some $2 billion for about 350 clients.

Demonstrating the fast growth in the region, the latest BofA Merrill Lynch/Capgemini World Wealth Report showed that the high net worth population in Latin America grew 8.3 per cent over the past year.