COMO PENSA O INVESTIDOR DE R$ 1,3 TRILHÃO SOB GESTÃO? | Second Level #28

Episode Overview

• This episode features Carlos Salamonde (Cás), CEO of Itaú Asset, exploring how the firm manages over R$ 1.3 trillion by balancing massive scale with agile decision-making.
• The narrative details the "Multi-Pod" organizational structure, explaining how a giant institution uses a centralized operational "chassis" to support dozens of independent, boutique-like investment teams.
• Key discussions include the evolution of the Brazilian market towards a "barbell" shape (low-cost ETFs vs. complex Private Markets), the strategy for internationalization, and how to innovate in crypto without sacrificing governance.
• The content is highly relevant for investors seeking to understand fund selection, asset management professionals interested in organizational design, and executives looking to scale complex businesses without losing agility.

Key Concepts

• The "Multi-Pod" Structure & The "Chassis": To solve the agility problem inherent in large firms, Itaú Asset separates "Alpha" from "Beta." The "Chassis" is a massive, centralized investment in technology, risk, and compliance (Asset Servicing). This infrastructure supports approx. 14 independent investment "pods" or tables. Each pod operates like an autonomous boutique with its own P&L, allowing the firm to scale its infrastructure while keeping investment decisions nimble.

• The Paradox of Scale in Credit: While size usually hurts active equity managers, Cás argues it is a distinct advantage in Private Credit. Large players (R$ 1.3T+ AUM) gain access to deals smaller firms never see, possess better negotiation leverage on terms, and can internalize liquidity—effectively becoming a "market within a market" to match buyers and sellers internally during stress periods.

• Capacity Management as Fiduciary Duty: A critical concept is "Capacity"—the maximum capital a strategy can handle before returns degrade. The episode emphasizes that closing a fund to new investors is an ethical obligation. Continuing to accept capital past this point dilutes the returns of existing clients solely to generate more fees for the manager.

• The "Barbell" Market Evolution: The investment landscape is splitting into two extremes. One end is low-cost, liquid, passive vehicles (ETFs/Managed Portfolios). The other is high-cost, illiquid, sophisticated structures (Private Credit, Real Estate, Special Situations). The "middle ground" of expensive active management that merely hugs the benchmark is disappearing.

• Internationalization: Asset vs. Liability View: A vital distinction for global expansion. Being international from an Asset perspective means buying foreign stocks/bonds (which many do). The harder challenge is internationalization from a Liability perspective—convincing foreign clients to entrust their capital to a Brazilian manager. Future growth depends on the latter.

• Co-Management vs. Distribution: In partnerships with global giants (like KKR), the goal should not be mere distribution (selling their funds). True value comes from "co-management," where the local firm combines its domestic expertise with the global partner's deal flow and origination, creating a unique product rather than just acting as a sales channel.

• The "Rising Stars" Revenue-Share Model: Instead of buying boutique firms outright (which kills their culture), Itaú adopts a revenue-share model. They provide capital and the operational "chassis" to emerging managers in exchange for a portion of revenue, but they do not take equity control. This preserves the entrepreneurship of the smaller firm while solving their scaling challenges.

Quotes

• At 0:01:19 - "Our business is, in fact, to have the relationship with the client." - Highlighting that regardless of the vehicle (ETF vs. Active Fund), the primary goal is retaining the client through market cycles.
• At 0:14:26 - "It's no use just having the best managers in the market... if you don't have an operational [structure] that runs this business... that controls, that gives transparency." - Explaining that investment talent fails without a robust "chassis" for risk and operations.
• At 0:15:54 - "The fact that we are big... gives us the opportunity to make better deals for our clients, negotiate better opportunities, structures... simply because of our size." - Countering the narrative that boutiques are always better; in credit markets, volume equals access.
• At 0:19:19 - "I prefer to close [the fund] than to bring in money and dilute my investor who is already inside. I don't think that's right." - Defining fiduciary duty as the willingness to turn away revenue to protect client performance.
• At 0:21:11 - "Muitas dessas mesas não têm um flagship próprio... elas gerem um pedaço de um fundo chamado Globo Dinâmico." - Clarifying that internal traders often manage "sleeves" of a larger aggregate strategy rather than public-facing funds.
• At 0:23:51 - "Foi um investimento 'boçal' de infraestrutura, de sistemas, de chassi... pra que a gente possa controlar P&L por P&L." - Emphasizing that the barrier to entry for the multi-pod model is not capital, but the technology required to track dozens of strategies simultaneously.
• At 0:32:19 - "Eu vou devagar porque eu estou com pressa... eu quero fazer de uma forma correta, com muita governança, com muito teste." - Describing the "go slow to hurry up" strategy for Crypto/Innovation, prioritizing infrastructure over FOMO.
• At 0:40:35 - "No Brasil, como a taxa de juros básica infelizmente é muito alta, o gestor não precisa se sofisticar pra ter um retorno real muito alto." - Explaining why the passive investment industry is smaller in Brazil; high interest rates make it historically easy to generate returns without sophistication.
• At 0:52:05 - "Pela ótica do ativo, eu acho que a gente tá bastante bem coberto... O que eu quero... é atraindo investidores de fora." - Identifying that the next frontier of growth is attracting foreign clients (liabilities), not just trading foreign assets.
• At 0:55:20 - "Não é uma parceria de distribuição... Se for só de distribuição, nós como Asset Management não temos o que falar aqui." - Arguing that asset managers should focus on intellectual property exchange in partnerships, leaving pure sales to the retail bank.
• At 1:00:50 - "Deixa essas gestoras onde elas estão... Eu não tenho o equity dos caras... É uma visão de receita." - Outlining the M&A philosophy of empowering emerging managers with infrastructure without suffocating them with ownership/control.
• At 1:08:00 - "Para mim, [o importante] é a forma como é tocado o negócio... a visão da formação daquela empresa." - Advising that when selecting managers, culture and governance are far better predictors of success than a short-term performance chart.

Takeaways

• Evaluate the "Chassis," not just the Driver: When selecting an investment fund, look beyond the star manager. Assess the operational infrastructure (risk, compliance, technology) that supports them, as this "chassis" prevents catastrophic failure.
• Respect Capacity Limits: View funds that close to new investment as a positive signal of ethical management. Be wary of managers who keep asset-gathering indefinitely in capacity-constrained strategies like small caps or credit.
• Adopt the "Barbell" Portfolio: Recognize the market shift and structure portfolios to utilize low-cost passive vehicles for efficient markets (liquid/beta) while paying higher fees only for true, illiquid differentiation (private credit/alternative assets).
• Innovate with Governance: Apply the "go slow to hurry up" approach to volatile assets like Crypto. Ensure the operational plumbing is tested and secure before deploying significant capital, rather than rushing to be first.
• Separate Liquid and Illiquid Teams: Do not mix management of liquid assets (trading) with structured assets (private credit/legal claims). These require distinct teams ("pods") with different risk protocols and psychological approaches.
• Seek Value-Add Partnerships: In business partnerships, avoid simple distribution deals where you just resell another's product. Strive for "co-management" arrangements where you gain access to the partner's deal flow and intellectual property.
• Prioritize Culture in Due Diligence: When hiring or investing in external managers, ignore the recent track record (which can be luck). Focus heavily on the firm's ethics, partnership structure, and long-term vision.