Retail investors in Brazil are piling into exchange-traded funds at a record pace as a wave of new products broadens the market. The number of retail investors in Latin America's largest economy allocating to ETFs climbed 39% from a year earlier to a record 914,000 in August, according to data from local stock exchange B3. The growth has come alongside a rapid expansion in supply, with the number of ETF offerings available jumping 55% to 219 over the same period.

"ETFs have passed an inflection point in terms of growth in Brazil," Felipe Paiva, managing director of client relations and retail investment strategy at B3, said. "We're getting close to the 1 million mark for people who have ETFs in their portfolios, and for us, that's a very significant number."

Among the most traded ETFs, BlackRock's BOVA11 — which tracks stocks listed on the nation's Ibovespa index — remains the most dominant in Brazil. Its average daily trading volume stood at 671.6 million reais ($131 million) in August, accounting for 41.5% of total ETF trading. Still, fixed-income ETFs have been investors' darling over the past year as rates hover above double-digits. The segment has attracted over 27.3 billion reais so far this year, overtaking variable income ETFs in terms of total assets, according to data from Anbima, Brazil's financial and capital markets association.