Why did the Americanas scandal affect Nubank’s clients’ money?

Nubank’s Immediate Reserve fund, which has invested 1% of its total value in US bonds, had a negative return in the month ending January 13th. In its advertising material, Nu Reserva Immediata is referred to as emergency reserve.

The return of the Nu Reserva Immediata fund was negative 0.26% in January through last Friday. Over the past 12 months, the money has returned 12.74%, through January 13th. By way of comparison, the CDI (Interbank Certificate of Deposit, market reference index) returned 12.59% in the last 12 months.

About 0.97% of the fund’s total was invested in Americanas bonds as of September 2022, the latest available data on the fund’s portfolio build, Economatica says. This bond was viewed by rating agencies as low risk. The company’s rating was AA+ by Fitch until January 11, before the crisis.

How did the Americanas crisis affect Nubank?

The Americans last week declared a R$40 billion debt, a R$20 billion tax gap and asked for legal protection against creditors.

As the value of the Americans fell on the stock exchange, the value of the fund unit also fell, which drove down the yield. In all, Nu Reserva Immediata has 18.61% of its assets invested in bonds, Estadão says. Hundreds of other fixed income funds have also been affected.

Who is the Immediate Reserve Fund suitable for?

According to the publicity material of the fund, “it is suitable for those who want to build up an emergency reserve in safety and also want a better return on savings and the Cdi installment in the long term”.

THE Nubank explain, no blog, that it is possible that the value applied in the Nu Reserva Immediata sometimes has a negative variation. This is because the fund is more diversified into fixed income investments.

Is it normal for emergency reserve funds to be invested in bonds?

Bonds are debt securities issued by companies and traded on the market. According to Terra Investimentos, it is common for fixed income funds to use private debt securities to seek a higher yield than the CDIthe benchmark index for these funds.

Given the scale of what has happened with Americans, there has been a large devaluation of bonds, due to the heightened perception of risk in the market. Therefore, the fund was penalized, albeit with the low percentage.
registry Chinchilla and Luis Novaes, of Terra Investimentos

According to Paloma mist, investment analyst at Toro Investimentos, investors should be aware of and check whether the fund they will be investing their emergency reserve into has bond investments. If so, the ideal is to stay out of it.

I advise against investing emergency reserve resources in investment funds that contain bonds, such as it is about riskier products, as they embody the credit risk of the issuers.
dove mistinvestment analyst at Toro Investimentos

Also, unlike other fixed income investments like CDB or letters of credit, the obligations are not covered by the Credit Guarantee Fund (FGC), she says.

How do Nubank boxes work?

Nubank Boxes launched last year as a fixed income investment. It is possible to invest from R$ 1 in the boxes.

There are two types of boxes: Nubank RDB and Nu Reserva Immediata.

  • The RDB is a bank deposit slip, a fixed-income security issued by banks and other financial institutions, and works similar to the CDB.
  • Nubank says the income in these tins follows the CDI. According to Nubank, emergency reserve can be applied to these boxes.
  • Part of the value left in these boxes, on the other hand, is applied to the Immediate Reserve Fund.

Nu Reserva Immediata has a different strategy.

  • The idea is that, in the long run, money yields more than cans and especially CDI. To have a higher return, the risk is also higher. Availability is also immediate.
  • Approximately 59% of the fund is allocated to government bonds, 11% to bank bonds and 31% to corporate bonds, such as bonds, CRIs and FIDCx (Credit Rights Investment Funds)
  • “It’s worth remembering that the return on investment funds can fluctuate based on market movements, up or down,” Nubank explains in the blog.
  • The fund’s promotional materials, however, state that this fund can be used as an emergency reserve.

What precautions should I take when investing my emergency reserve?

  • When you think of the emergency reserve, assets can’t be risky, like in the stock market or multi-market funds.
  • Ideally, they should have immediate liquidity and a positive yield, according to Cássia, a master’s degree in economics and a financial educator at ABC de Economia. Girotto.
  • He says the reserve can be used in case of unemployment and to pay bills, in case of illness to pay for a consultation or more expensive medicine, or repair By car. It works as a “lifeline,” that is, as a last resort to avoid drowning in debt.
  • For Cássia, good assets for the financial reserve are: government bonds issued by the National Treasury and post-selic-fixed assets, CDI-pegged bonds with daily liquidity, or CDBs with daily liquidity.

What does Nubank say?

In a note sent to UOL, Nubank says it has already reviewed its investment strategy in Americanas. See the full note below.

“Nu Asset Management, investment fund manager of Nubank, clarifies that the fixed income fund “Nu Reserva Imediata” has a strategy designed to be a low-risk option with very high liquidity and seeks to outperform the CDI over time Nu Reserva Imediata is an investment grade fixed income fund, with a positive nominal yield of 2.72% over the past 90 days, and follows a long-term path to profitability, supported by investment diversification.

Like dozens of funds on the market with the same profile, Nu Reserva Imediata also invests in private credit assets, within a regulatory limit. The small portion of the investment in Lojas Americanas bonds, historically rated Triple-A by several rating houses, has already been reviewed by Nu Asset Management.”

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