Brazilian investors face high home bias despite global economic exposure

Brazilian investors exhibit a high degree of ‘home bias,’ preferring to concentrate their wealth within the domestic market despite increasing exposure to global economic fluctuations. A 2024 study by FGV indicates that between 16% and 18% of Brazilian consumption is subject to exchange rate variations, suggesting that while daily life is increasingly dollarized, investment portfolios remain largely local.

Reports from XP Investimentos suggest that international diversification can mitigate dependency on the Brazilian economy and provide access to sectors underrepresented in the local market, such as technology and healthcare. While high domestic interest rates (CDI) have historically incentivized local investment, experts recommend allocating a portion of assets to international stocks, fixed income, and ETFs to reduce systemic risk and hedge against local fiscal and economic volatility.