The account balance of FGTS (Service Time Guarantee Fund) may be used by workers with the intention of purchasing shares in the process of privatization gives electrobras (ELET6).
Anyone interested in acquiring company shares can use up to 50% of the money in their accounts. But is using the Guarantee Fund to invest in variable income really a good idea? After all, stocks are subject to market mood, which fluctuates with political, economic and corporate events.
The answer can be found in two past experiences, in which the government authorized the use of the FGTS to invest in stocks: that of Valley (VALE3), in 2002, and the onePetrobras (PETR4), which allowed, on two occasions (2000 and 2010) the use of the Fund to buy shares.
FGTS and Petrobras (PETR4)
The purchase of shares in the state-owned company took place through privatization mutual funds, created in the 2000s with the aim of enabling the FGTS to invest in shares of state-owned companies. At the time, workers were able to invest up to 50% of their balance in shares of the oil company.
Those who chose to invest in Petrobras had a return of 619.67% in the period from August 10, 2000 to September 10, 2010. On the other hand, those who preferred to keep the money in the fund had a return of 65.62% in the same period of time.
In August 2000, when the share sales auction took place, only 317,000 workers chose to use the FGTS to acquire the company’s shares, a total of R$ 1.6 billion at the time.
In 2010, then-President Luiz Inácio Lula da Silva authorized a second round of investments. At that time, workers were able to invest up to 30% of their balance in state-owned shares. It was forbidden, however, the participation of those who had sold shares they bought in 2000.
Until August 2013, the worker who chose to invest in the company obtained an accumulated profitability of 84.42%. However, that same year, the market turned in the second half and the shares lost 15.63% of their value until August.
The fall was due to the appreciation of the dollar against the real, which directly affected Petrobras and the large indebtedness facing the company. In 2019, the fund had a return of 798.8% since its inception.
FGTS and Vale (VALE3)
In March 2002, the government provided R$ 1.05 billion in shares in the mining company. The demand, however, was much higher – R$ 3.4 billion -, which forced an apportionment.
Funds dedicated to Vale’s shares accumulated an average yield of 1,564% until 2019, 13 times higher than the FGTS yield offered in the period.
In 2013, there was a big scare for investors, and the shares lost 14.10% in the year. The drops were due to the delicate situation of China, at the time, the main importer of the mining company.
In 2016 there was also a sudden drop in stocks, leaving investors with their hair on end.
Eletrobras and the FGTS
Now, it’s time for workers to decide whether to use their FGTS balance also to buy Eletrobras shares.
According to analyst Jason Vieira, from Infinity Asset, the market sees this movement “in a positive way, after all, the FGTS yield has reached only 3% per year.” And he adds: “the purchase of these papers can turn out to be a profitable possibility for workers.”
Disclaimer
THE Money Times publishes informative articles of a journalistic nature. This publication does not constitute an investment recommendation.
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Source: Moneytimes
I am an author at Global happenings and I mostly cover automobile news. In my time working in the automotive industry, I have developed a keen interest in the latest developments and trends. My writing skills have also allowed me to share my knowledge with others through articles and blog posts.
