Investors Eye FIIs Ahead of 2026 Elections
A recent study by XP's Fundos Listados team suggests that FIIs may exhibit a relatively defensive behavior in the face of election-related risk, especially when compared to the Brazilian stock market.
As the 2026 elections approach, investors are once again paying close attention to the potential impact of the political landscape on Brazilian assets. Historically, election periods have been characterized by increased market volatility.
To assess how real estate investment funds (FIIs) behave in this environment, Marx Gonçalves, head of Fundos Listados at XP, Eduardo Bacelar, analyst of Fundos Listados, and Antonio Mello, quantitative strategist, analyzed the performance of the IFIX and the three main classes of funds that make up the index in the 12 months prior to and after the first round of the 2014, 2018, and 2022 elections.
Their study focused primarily on return and annualized volatility.
## The IFIX in Elections
According to the analysts, the IFIX did not show a consistent pattern of performance before the elections in the three cycles evaluated. In the years with a second round, the index's volatility decreased between the two votes, returning to levels similar to those recorded before the electoral process.
This behavior suggests that FIIs may exhibit a relatively more defensive character in the face of election-related risk, especially when compared to the Brazilian stock market, represented by the Ibovespa.
## Current Volatility Raises Concerns Before Elections
However, the 2026 scenario presents a difference compared to the previous cycles. Since May, the IFIX's volatility has been above the average observed in the election periods analyzed, approaching the levels recorded in 2018.
For the authors of the study, the movement is not necessarily related only to the elections. The main influence would be the opening of the intermediate and long-term yield curve, amidst concerns about Brazil's fiscal situation, inflation trajectory, and external factors.
## FII Return Behavior Also Unique
Considering the average of the three election cycles, the IFIX had its best annualized performance in the three months prior to the first round, a dynamic similar to that observed in the Ibovespa.
After the second round, the real estate investment funds showed a gradual recovery, with increasing returns in the subsequent periods, reaching the 12 months after the electoral definition.
| Election Year | IFIX Return (3 months before 1st round) | IFIX Return (3 months after 2nd round) | | --- | --- | --- | | 2014 | - | - | | 2018 | - | - | | 2022 | - | - |
The numbers need to be interpreted with caution. The composition of the IFIX changed significantly between 2014 and 2022, while the main categories of the index - funds of bricks, receivables funds, and FOFs/multi-strategy funds - have distinct exposures to interest rates, inflation, credit, and economic activity.
The study's findings suggest that FIIs possess unique characteristics and do not necessarily reproduce the behavior of the stock market during periods of greater political uncertainty.
