Nubank and Brazilian Stock Exchange Launch Dividend-Paying ETF

Nubank, the Brazilian investment company, has made a significant move in the investment market with the launch of the first exchange-traded fund (ETF) in Brazil that pays monthly dividends to shareholders. The new ETF, called Nu Renda Ibov Smart Dividendos (NDIV11), is a result of a partnership between Nubank’s investment fund manager, Nu Asset Management, and B3, the Brazilian stock exchange.

Unlike traditional ETFs, which usually reinvest dividends back into the fund, NDIV11 allows shareholders to receive monthly dividends. The product is now available to any investor, regardless of their affiliation with Nubank or its broker, NuInvest. Individuals and institutional investors can invest in the new ETF, subject to a suitability assessment with the affiliated broker.

The partnership between Nu Asset Management and B3 aims to create an innovative index called Ibovespa Smart Dividendos B3. This index will include companies from the Ibovespa B3 that pay the highest dividends relative to the share price. The weight of each stock in the portfolio will be determined based on the dividend payments’ recurrence, lower variations, and their proportional values over the years.

The development of ETF offerings in Brazil follows a global trend. Data collected by ETFGI, an independent research and consulting platform for ETFs, shows that globally invested volume in ETFs has grown by 20% annually over the last two decades, with approximately $10.6 trillion under management as of July 2023. In August, the invested volume in ETFs on the Brazilian stock exchange alone reached nearly R$45 billion, according to B3’s Monthly ETF Bulletin.

Andrés Kikuchi, executive director of Nu Asset Management, expressed excitement about the new product, saying, “With this new product, Nubank takes the leading role in the evolution of exchange-traded funds in Brazil. The unique formula of paying dividends through investment in ETFs and the partnership with B3 for the development of Ibovespa Smart Dividendos B3 combines the innovation DNA that has marked our trajectory in the last 10 years and the efficiency desired by investors.”

In addition to Nu Renda Ibov Smart Dividendos (NDIV11), Nu Asset Management is launching another ETF called Nu Ibov Smart Dividendos (NSDV11), which replicates the Ibovespa Smart Dividendos B3 index. The difference is that NSDV11 reinvests dividends back into the ETF itself. NSDV11 is also available to any investor, individual or institutional.

The initial minimum investment amount for both Nubank’s ETFs is R$100, corresponding to one share, but it may vary over time according to the index’s fluctuations. The annual administration fee for NDIV11 and NSDV11 is 0.5%, with no performance fee charges.

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