Financial elite and index capitalism in Brazil

Actors in the expansion of the ETFs market and new layer in the power structure in the corporate world

Abstract

Recent studies on the financialization of central economies address the growing concentration of power among large financial asset managers and the consequences for large financial and non-financial corporations, especially in terms of corporate governance. Among the strategies adopted by these agents stands out the minority position in thousands of companies listed on the stock exchange and the issuance of passive management funds, nodded exchange traded funds — ETFs. This article aimed to analyze the expansion of investments in passive management in the Brazilian capital market. According to the B3’s ETF newsletters and the ETF.com.vc website, the Brazilian market of ETFs follows the international trend, with dominance of the BlackRock group both in the funds that track the main national and international indices. Exposure to international products was implemented by the strategy of issuing Brazilian depositary receipts (BDRs) of ETFs in B3, expanding the offer of ETFs that track international indices. In Brazil, among the functions accumulated by B3 stands out the main provider of local indexes. And, as in large global companies, B3 has among its major shareholders major international asset managers, such as the Capital Group, BlackRock, and Vanguard groups, confirming a potential alignment of interests between index providers and ETF issuers.