Brazil Equity Strategy MVPs

Research evidence excerpt

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15 Sep 2026 03:15:17 ET │ 39 pages

Brazil Equity Strategy MVPs

Probability weighing a barbell portfolio for electoral outcomes

CITI'S TAKE

Citi recently published a multi-asset note titled “Two Administrations,

Different Economic/Equity Implications” (link). In the Equity section, we

created two equity baskets, one for a reelection scenario and another for an

opposition win scenario. In general, our analysts favor all-weather stocks in

a reelection scenario in addition to names exposed to select governmental

programs, such as MCMV. In an opposition win scenario, the analysts tend

to favor greater duration stocks that could benefit from expected lower

long-term rates. Since our last MVP update, the election has gotten tighter,

so we now slightly favor greater duration stocks. We also see Brazil

somewhat as an “anti-AI trade” given its heavy weight towards traditional

sectors such as commodities and financials, which can act as a hedge in

global portfolios that have become skewed towards AI due to the relative

performance of that sector.

MVP portfolio performance — Our MVP portfolio has underperformed the IBOV

over the past 30 days, up +8.6% vs Ibovespa +11.1% (Figure 18). YTD, the portfolio is

up +7.4% vs +15.2% for IBOV (Figure 19). Since its inception, our MVP portfolio is up

+51.7% vs +61.7% for IBOV (Figure 20).

Recapping the MVPs rationale — Our MVP portfolio carries 10 to 15 names,

composing a balanced portfolio intended to outperform the Ibovespa index over

longer periods. The stocks among our MVPs have 5%, 10% or 15% weights. Our focus

is on picking stocks via a bottom-up approach considering top-down pressures.

Current MVP portfolio weights — We are removing SMFT, ITUB, SAUD, MOTV,

ENEV, and CURY, and adding XP, BPAC, HYPE, ECOR, and SBSP. The new portfolio

consists of the following names: (i) XP, BPAC, PRIO, RDOR, HYPE, and ECOR (5%

each); and (ii) MULT, EMBJ, VALE, PETR, AXIA, SBSP, and VIVA (10% each). The main

weight adjustment is for VIVA, which increases from 5% to 10%.

Andre Mazini, CFA AC

Gustavo Schroden AC

Alexander Hacking, CFA AC

Gabriel Barra AC

Joao Pimentel AC

João Pedro Soares AC

Leandro Bastos, CFA AC

Filipe Nielsen AC

…