Capitalization bonds only generate profit for banks, and are like a lottery, says analyst.

If your bank manager took advantage of a visit to the branch to suggest a capitalization bond, or a TV advertisement tempted you, it's good to know that capitalization bonds are good for financial institutions but a terrible alternative for the customer, say market experts. "It gives a high margin to those who offer the product, the banks. But for those it's intended for, the customer, it only makes sense if the person has a habit of playing the lottery," says financial consultant Valter Police Junior, founding partner of Fiduc, a network of financial planner associates.

Even the industry association says that capitalization bonds should not be sold as investments, but some banks do this, and they are being challenged. This is the case with Santander, which launched an advertising campaign promising gains with the bonds. The ads are being questioned by the National Council for Advertising Self-Regulation (Conar).

It's a way to lose money.

Market professionals claim that capitalization bonds yield even less than savings accounts, which have already lost much of their profitability due to falling interest rates in the country. In fact, Brazilians who invest part of their savings in this product will be losing money because, in practice, it doesn't even keep up with inflation. Someone who invests R$1.000 might receive R$965 the following year.

Generally, a capitalization bond pays the equivalent of the TR (Reference Rate). In some cases, there is an additional interest rate, but the gain is always lower than savings. However, since the basic interest rate (Selic) is very low (5,5% per year), the TR yield has been zero. In other words, if the bond's yield is only the TR, the bond will return the same amount you invested.

But the real value of this product will decrease upon redemption. This is because of inflation. So, if the cost of living rises by 3,5% in a year, for example, the purchasing power of R$1.000 invested will become R$965,00 in real terms.

In practice, the client will lose money, since there will not even be an adjustment for inflation. "What the person should evaluate is how the money that has been sitting idle should have evolved over time. If they withdraw the same amount of money after a year of it being idle, they have lost money," says the consultant from Fiduc. The money could be invested in any other investment, such as Treasury Direct and CDBs, and yield more.

The industry federation itself says it's not an investment.

The CEO of the National Federation of Capitalization (FenaCap), which represents the sector, Carlos Alberto Corrêa, himself states that capitalization bonds should not be sold by banks as an investment alternative.

"We understand that capitalization bonds function as a financial education tool. The customer exchanges profitability for a chance to receive a prize to fulfill a consumer dream," he said.

According to Fenabrave, before purchasing a bond, consumers should always clearly define their objective and be informed about their rights and obligations.

Santander's campaign is questioned by Conar.

This guidance doesn't seem to be clear to some market players. The Santander bank, for example, is being questioned by CONAR (Brazilian Advertising Self-Regulation Council) because of a campaign called "You're a millionaire or your money back".

The bank promises returns on capitalization bonds. Claimants question this promise in the advertisement.

When contacted, Santander said they would not comment on the matter.

What is a capitalization bond?

A capitalization bond is a credit instrument, meaning it's a product in which you invest a certain amount, with monthly payments or a single lump sum, upon purchase. It is regulated by SUSEP (Superintendence of Private Insurance).

These securities can only be issued by capitalization companies, such as large banks that have such companies linked to them.

The product has a defined maturity date, starting from 12 months. Herein lies the first problem: the client can only withdraw the money at maturity to receive their invested funds back.

If you decide to withdraw before the due date, the capitalization company will retain part or all of the money. The retention percentage gradually decreases as the maturity date of the bond approaches.

Demand for capitalization falls.

According to market experts, the increasingly weak appeal of this product is already affecting demand in the sector, which is experiencing stagnation. According to data from the National Federation of Capitalization (FenaCap), which represents the sector, annual revenue generated by these products fell from R$ 21,9 billion in 2014 to R$ 21 billion in 2018.

During the same period, for example, the assets in savings accounts increased by 20%, reaching R$ 797 billion. ( UOL Economia – João José Oliveira UOL, in São Paulo)