Radar Perene / Articles / article

IFIX vs. IBOV: when bricks only rise because paper collapses

Article

The extreme

A ratio can spike without anyone having bought a thing. That is what happened to the IFIX/IBOV relationship — real estate funds measured against the equity index — in the month domestic fear turned into liquidation. Read on its own, the surge suggested a rush into bricks. The honest reading was the opposite: the IFIX did not rise, it was the IBOV that gave way faster, and any asset that falls less looks like it is rising in the arithmetic. In numbers: IFIX/IBOV jumped from 1.02 to 4.16 in March 2020, with the dollar at R$ 4.8839 (a statistical anomaly), the Selic cut to 3.75% a year, and the Perene Risk Index at the floor, at 10.6. The brick was not chosen; it merely withstood the collapse of paper.

What happened next

Eighteen months on, in September 2021, the market lived through another scare — this time of domestic origin. Mood collapsed from 43.8 to 9.4 on the Ânima scale and capital, now, genuinely chose where to run. Except bricks were left out of the choice. The real estate funds merely crawled back to zero, from -0.82 to 0.09 on the intermarket ratio, while the true shelters were elsewhere: commodities in reais leapt from 0.12 to 1.53 and utilities from -0.40 to 0.95. Selic at 6.25% a year, dollar at R$ 5.28. When the investor could elect a refuge, he preferred the real asset shielded by the exchange rate and the contracted defensive flow — not listed real estate.

What did not happen

In neither episode were bricks the destination of fear. In 2020, the surge in IFIX/IBOV was not a purchase of real estate — it was an artifact of the denominator, a shelter that appeared on the ruler without any hand having sought it. In 2021, with full freedom to choose, capital passed it by. The naive reading — "bricks protect in a panic" — held up in neither of the two crossings.

The honest verdict

The IFIX/IBOV ratio measures two things at once, and only one of them is bricks. When paper collapses, the shelter shows up in the arithmetic without anyone having bought it. In two panics of distinct natures, listed real estate was never the chosen destination of fear: a mirage of the ruler in 2020, a bit player in 2021. The number rose; the shelter did not.

Continue reading: The money that fled inward · Was March 2020 the bottom? · The intermarket as a map of capital →

The Radar reads these regimes every day. See today's reading →

Characters: Structure (intermarket) · Flow (risk appetite) · Dollar · Cyclicals × defensives