FIIs 101
How a FII actually works
4 min
A FII is a closed-end fund: it issues a fixed number of cotas in an offering, and after that you buy and sell those existing cotas from other investors on the exchange rather than depositing or redeeming with the fund directly.
The people involved
- Cotistas (cota-holders) — the investors, including you.
- Gestor (manager) — decides what the fund buys, sells and how the assets are run.
- Administrador (administrator) — the regulated institution legally responsible for the fund, its bookkeeping and compliance.
- Tenants / borrowers — the businesses paying rent on the properties, or paying interest on the credit the fund holds.
Where the money comes from
The fund earns income — mostly rent from its properties or interest from real-estate credit it owns. After paying the fund's costs (management fee, administration, taxes at the fund level), the net result is distributed.
The distribution rule
By the rules that govern FIIs, a fund must distribute at least 95% of its accounting profit (calculated on a cash basis) to cota-holders, paid at least every six months — and in practice the vast majority pay monthly. This is the engine behind the steady monthly income FIIs are known for.
What you actually own
A cota is a fractional claim on the fund's assets and its income stream. You are not the landlord of any single building; you own a small, liquid, diversified piece of the whole portfolio.
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