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AdvancedBrazilian REITs · Lesson A5.2 · Module A5

How many FIIs to own and how to diversify

Module A5: Building and managing your portfolio

10 slides~4 minquiz at the end

In this lesson

  • The income hit with 3, 10 and 30 funds
  • Three tickers, one single risk
  • The risk sources to spread
See the slides
Eggs in a cardboard carton

Brazilian REITs · Lesson A5.2

How many funds do you need?

Diversifying means spreading sources of risk — not collecting tickers.

One fund cuts its payout in half

What's left of R$ 1,000 in income

3 funds→−R$ 166.67half of 1/3=R$ 833−16.7%
10 funds→−R$ 50half of 1/10=R$ 950−5%
30 funds→−R$ 16.67half of 1/30=R$ 983−1.7%

Portfolio with equally weighted funds.

The other side of the math

Smaller hit, more reading

3 funds

−16.7%

  • 3 reports a month

10 funds

−5%

  • 10 reports a month

30 funds

−1.7%

  • 30 reports a month

There's no magic number: the right one is what you can keep up with.

The trap

Three tickers, one single risk

Your portfoliolooks diversified
Fund Aoffices
Fund Boffices
Fund Coffices
Same manager
Same tenant
Same region

If the tenant leaves, all three fall together.

Real diversification

Spread the sources of risk

  • Typeproperty, paper, fund of funds
  • IndexIPCA, CDI, rent
  • Managerdifferent firms
  • Tenant or borrowernone weighing too much
  • Regioncities and states

How the site's 7 portfolios do it

Diversify without churning

  1. Cap per managerno single firm weighs too much
  2. Review every 14 daysnot after every headline
  3. Exit with a bufferno swaps over a detail
  4. Cash declaredno good fund, cash stays

Remember this

Three takeaways

  1. More funds, smaller hitWith 10 equal funds, one payout halving costs 5% of income.
  2. Risk, not tickersSame manager, tenant or region adds no diversification.
  3. Fits your routineThe right number is the one you can keep up with.

Quick quiz · 1 of 2

Which portfolio is more diversified?

See answer

The 5 different ones. In the others, a single problem — the manager or the borrower — hits every fund at once.

Quick quiz · 2 of 2

4 equal funds pay R$ 800 a month. One stops paying. What's left?

See answer

R$ 600. Each fund paid R$ 200; losing one entirely cuts income by 25%.

Lesson complete

Next lesson

A5.3Advanced · Lesson A5.3How much to invest to live off the income?Living off income forever means spending only the real return and reinvesting inflation.Continue
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Educational content, written for learners. Not investment advice.