Incorrect classification can affect 36% of FIIs; association proposes common reference

According to InfoMoney, incorrect classification can affect 36% of real estate funds (REITs), a problem that makes life difficult for those who compare these vehicles before investing.

To address the issue, LAREAL (Latin America REITs Association) launched a methodology designed to identify the effective activity of FIIs. According to the report, it relies only on the funds' audited financial statements to define each one's classification.

Today, each entity, portal or analysis house usually adopts its own criteria to classify the same funds. The proposal seeks to replace this variety with a common reference, which would be updated periodically.

The central point is comparability. When the same fund receives different labels depending on the source consulted, the investor needs to check each criterion before deciding. For The X-Trader News, predictability and verifiable data are pillars of a healthy market, and a single reference favors exactly that.

According to the report, the lack of standardization can also make it difficult for foreign investors to analyze the sector, who follow the Brazilian market based on parameters from other countries.

The reach of the initiative will therefore depend on whether the sources that currently publish classifications start to adopt the same reference.

What changes for the investor

If the methodology is adopted, the reading of the segment tends to become more uniform, as the classification would be based on the same basis of audited statements. This can make it easier to compare funds and reduce the need to cross-reference labels from different sources. The change concerns the way of analyzing the funds, and not the recommendation to buy or sell any asset.

Automatically translated from Portuguese.