Annual
Report 2013

With a focus on medium- and long-term strategies, our team of financial experts, whose job is to analyze the best fund allocation alternatives, monitors the behavior and evolution of portfolio funds. The procedure follows the guidelines, approved by the Executive Board and the Financial Committee, on risk analyses, stringent asset investment criteria, and the assessment of different aspects of the macroeconomic state of affairs.

During FY 2013, despite the volatility in the financial markets, we maintained our asset management strategy and policy. The funds we manage follow a solid strategy based on long-term investing and diversification, requirements that allow us to streamline and give more flexibility to the funds we invest, according to market conditions.

With this positioning, we achieved recognition from specialized consulting firms and clients themselves, posting the lowest and best retirement plan withdrawal rate in the industry, which suggests client loyalty improvements during FY 2013. Our retirement funds (the PGBL and VGBL categories) were highlights according to the special issue of Você S/A (August 2013), which gave them four and five stars, and the list of Você S/A's Top 100 Retirement Companies in the second special issue on retirement (November 2013), with 15 funds. Both were prepared by the Center for Financial Studies of the Getulio Vargas Foundation (FGV-SP).

We were also rated four and five stars by Valor Econômico's ValorInveste in a Standard & Poor survey (November 2013). They highlighted our outstanding performance in the net yield category.

At Brasilprev, the entire process to establish strategies and manage a given fund or investment portfolio aims to map business opportunities with a controlled risk to diversify investments and maximize potential gains. To this end, we are always looking for investment opportunities when discussing the state of the industry and assessing different securities to build our portfolio.

Governance in Asset Management

In our financial operations, we start by adopting stringent criteria to make sure that the funds of our clients are responsibly and competently managed in compliance with a controlled risk management process.

Our Financial Committee is tasked with establishing investment strategies for a fund or family of funds, which will be carried out by our managers as well as the BB DTVM professionals to provide our clients with outstanding return rates. This allocation strategy requires us to analyze scenarios, sectors of the economy, and markets (fixed income, variable income, financial and capital markets) as rigorously as possible from every possible angle, including pros and cons, risks, profit opportunities, the prospects of each fund, and so forth, always in line with the investment policy that was passed by our Board of Directors.

To get a consistent performance of our investment funds that combines a solid return rate, controlled risks, medium- / long-term vision, and transparency in transactions, we pay attention to every key factor.

BB DTVM

BB Gestão de Recursos – Distribuidora de Títulos e Valores Mobiliários S.A. (BB DTVM) is the leading company in the Brazilian investment fund and portfolio management industry and administers the assets we manage. This wholly-owned subsidiary is known for specializing in third-party asset management and managing the investment funds of Banco do Brasil clients, whose needs are met by the largest network of banking services in Brazil, with a footprint that covers 97% of the Brazilian territory.

For almost three decades in the financial market, BB DTVM ended 2013 with BRL 493.7 billion in assets under management, a 20.9% market share, according to the rankings of the Brazilian Association of Financial and Capital Market Institutions (ANBIMA, acronyms in Portuguese). In charge of managing the financial investment portfolio of BB Seguridade subsidiaries, since 2006, it has been rated MQ1, the highest management quality rating, by Moody's Latin America, one of the main credit rating agencies in the world, after having it reviewed and upheld in 2013. BB DTVM's credit risk analysis and follow-up process was also certified to ISO 9001:08 by the Vanzolini Foundation.

In November 2010, BB DTVM signed the Principles for Responsible Investment, an initiative from global investors in association with the United Nations Environment Programme's Financial Initiative and the United Nations Global Compact that aims to use practices that favor the integration of environmental, social, and corporate-governance issues into investment analyses and decisions in managerial processes. As our fund manager, these guidelines have been strictly followed by the company.

Families of Funds

We rely on seven families of investment funds with different structures, according to the type of plan chosen by clients, their profile, and the maturity dates they select to receive their benefits.

FIX Classic

FIX Clássico meets the needs of clients with very low risk tolerance who are close to achieving their life plans and feel the need to protect their capital. Therefore, they are more careful and try to avoid fluctuations in investments. Moreover, they are willing to give up on a better yield in the long run.

FIX Family

Oriented towards clients that want a long-term return at a minimum risk, this fund aims to protect their wealth. With this fund, we invest in government bonds to make the most of an interest rate that is still attractive in the long run and corporate bonds to get a premium on the interest paid by government bonds.

FIX Premium

This is intended for clients that want to make long-term investments, since fluctuations in units are higher than other FIX offerings. This family of funds offers our clients an investment option with an outstanding return in the long run.

Balanced Fund 20

For an outstanding return in the long run, it takes moderate risks in transactions and allocates 15% to 20% of investments to variable-income securities, especially in separate accounts, and 80% to 85% in fixed-income securities (government and corporate bonds).

Balanced Fund 49

With a bold profile and long-term growth forecasts, up to 49% of funds are invested in variable-income securities (separate accounts) and at least 51% in fixed-income securities (government and corporate bonds).

Balanced Fund 49D

As another family of funds with a bold profile, variable-income investments are allocated to shares of companies with a good history of dividend payout. Thus, up to 49% of funds are invested in variable-income securities and at least 51% in fixed-income securities.

Ciclo de Vida

Considered the most cutting-edge investment concept in the Brazilian retirement industry, it aims primarily to follow up on the life cycles of our clients. In practice, it adjusts fixed- and variable-income percentages over time to try and find a better balance to get the lowest risk-return ratio. Risks are commensurate with the selected date: if bold, there is more time to endure potential financial fluctuations; if conservative, the redemption date is closer.

We have three categories in this family of funds, according to the timeframe to execute the life plans of clients: Ciclo de Vida 2020, Ciclo de Vida 2030, and Ciclo de Vida 2040.