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With the rising wealth and sophistication of LatAm investors in the last decade, many followed the global trend toward investing in hedge funds as part of their portfolio diversification strategies, attracted by the high returns often promised from that asset class. But the poor performances of some hedge funds during the world financial crisis and in the years since has left a bitter taste in the mouths of many families and high net worth individuals in the region. “Their view of hedge funds is mixed at best, if not negative – and rightly so,”  ...

As wealthy LatAm families have begun diversifying their portfolios more aggressively, they are doing so not only across asset classes and markets but across jurisdictions, as well. This trend has persisted, or indeed accelerated, as many traditional save havens have reformed their exchange of tax information regulations to conform with international standards. “There is a great benefit to having multiple jurisdictions holding your money, assuming you can legally you do it,” says Carol Pepper, CEO and Founder of Pepper International, a New York-based family office serving international clients. “You just don’t know what’s going to happen within the government of your country. Where you can be offshore from your home jurisdiction ...

1. What is the strategy of your fund? It is a long-short market-eutral fund that seeks gains using the relative equity performance in the Bovespa market. 2. Have you remained fairly liquid or not? Yes. 3. What have been our allocations this year: The allocation is usually balanced between a long-term portfolio hedged in the Bovespa index future and many different pair trades (mostly intra-sector). 4. Please describe your investor demographic, where are they from, private or institutional: The fund accepts investments only from Brazilian Investors and the current client base is composed mostly of private clients...

Significant changes have occurred since the end of Argentina’s crisis and default in 2001. Top of the list is the fact that LatAm is no longer flying under the radar of international investors. The returns of the fixed income assets have called the attention of the investment community around the world. A good alternative to fill the appetite for Argentine exposure that combines diversification and local expertise are the mutual funds locally called Fondos Comunes de Inversion (FCI). In Argentina FCI’s have 50 years of track record and currently approximately US$ 6 billion of assets under management. 44% of FCIs ...

While still smaller than other global regions in terms of aggregate assets - around US$1.4 trillion in mutual fund assets and about $710 billion in pension assets - fast growth in Latin America as a region is capturing the imagination of investors, distributors and asset managers alike, with tactical and strategic opportunities prompting resource allocations and investments. According to a new 110-page Strategic Insight research study on the region, 'State of the Asset Management Industry - Latin America', "Depending on the global market environment the region's mutual fund industry could reach between US$2.8 trillion and US$3.6 trillion in assets ...

The Hedge Fund Exchange (HFEX) is a compiler and distributor of high-quality specialist market information for hedge fund managers and retail investors, trading with bonds, Gold, Oil and banking instruments. The core of HFEX is a web portal which includes a customizable interface that lets the user function as an Alternative Trading System or Multi-lateral Trading Facility. In addition, HFEX also gives Hedge Funds and small-boutique fund managers access to applications that allow for their own secure data to be linked to HFEX liquid data ...

U.S. companies have been investing heavily in Brazilian private equity in recent years, capitalizing on the across-the-board growth in the country’s small, mid and large cap companies.  But according to Malcolm McLelland, an American-born, Brazil-based consultant and financial economics researcher, these investors often fail to appreciate the complexity of Brazil and the special talent of many of its business leaders. “Very few people know much about Brazil and how to do business here,” he says. “It’s not as easy as finding a sales representative here and selling products.  There are import tariff issues, cultural issues ... 

Hedge funds have become one of the most vital asset classes in LatAm in recent years, and LatAm hedge funds some of the most successful in the global industry, as local investors aim to diversify their strategies and exposure in the region while foreign investors vie for booming regional wealth and a deepening pool of talented local managers. According to a July report from Eurekahedge, a research firm that tracks the hedge fund industry, Latin America currently has 442 operational hedge funds, four times more than it had at the end of 2000, with a total of US$64 billion AUM, up 23-fold from 2000 ...

Given its robust growth in recent years and massive wealth compared to its neighbors, Brazil has attracted the lion’s share of global investment in LatAm, with foreign investors allocating especially aggressively to equity and government bonds.  Brazilian investors, meanwhile, have been reluctant to look beyond fixed income, as the risk-free returns they find there are better than those in other, more volatile asset classes.  Brazil’s benchmark Selic interest rate is, at 12%, the highest among G20 nations ...

On May 30 of this year, the Integrated Latin American Market (Mercado Integrado Latinoamericano, or MILA) was launched, combining the stock markets of Colombia, Chile and Peru into a single cross-trading platform.  A key component of a regional trend toward integration, MILA has been widely lauded as an important move toward bolstering the already robust growth of the three constituent countries.  Investors expect the platform to increase the liquidity of companies by giving them easier access to global capital, and to attract more foreign investors to the Andean region, especially as they begin diversifying away from Brazil.  MILA began as the largest public equity market in the LatAm region in terms of total listed companies ...

Alternative asset managers around the globe are vying for the attention of Brazil’s swelling pension funds. As of early 2011, these funds had a total of $342 billion under management and had grown an average of 14% per year for the last five years, one of the highest rates in the world, according to Towers Watson, an industry researcher and consultant. Legislative reforms in 2009 and 2010 loosened the restrictions on where and how those funds could invest, raising the limit on investments in foreign assets from 3% to 10% and allowing for more allocations in domestic alternative assets, including real estate and infrastructure ...

The progress of alternative asset investment in LatAm is following two basic meta-trends, that is, large-scale and long-term patterns that transcend specific products, firms or opportunities. These meta-trends are, first, the increasing interpenetration of managers from the so-called developed and developing countries into each other’s markets, and second, the global movement toward tapping the wealth of LatAm high and ultra-high net worth individuals, who are increasing in number in a region that already has the highest density of HNWI in the world. Such is the view of Daniel Enskat, a Senior Managing Director and Head of Global Consulting at Asset International’s Strategic Insight ...

The wealth and quantity of high net worth individuals (HNWI) in LatAm has grown in recent years.  According to the Capgemini/Merrill Lynch World Wealth Report 2011, the number of LatAm HNWI grew by 6.2% in 2010, and its total HNWI wealth by 9.2%.  There are about a half-million HNWI in LatAm, a relatively low figure compared to developed regions, though its concentration of ultra-high net worth individuals among the HNWI population is the highest in the world. By and large, however, they have refrained from investing their wealth in alternative assets ...

After taking a battering during the 2008 credit crunch and struggling in the early stages of recovery, quantitative (or ‘quant’) funds are trying to reassert themselves in the industry. And a small, but growing, number are looking to start afresh in the world’s most promising emerging markets. In Latin America, quant funds, which use complex computer models and algorithms to identify investment opportunities, are a relatively new phenomenon. Although the first appeared in the region in 2004, it wasn’t until 2007-2008 that the sector began to grow. Even today it remains on the fringes of a nascent industry ...  

 U.S. Institutional investors looking to increase their exposure to emerging markets have been turning increasingly to a handful of LATAM countries, where they see a swelling pool of experienced fund managers working within a context of political stability and economic growth.  Brazil has garnered the most attention, but Chile, Colombia, Perú, and México are also increasingly attractive. “I’ve been in the private equity market for the last fifteen years,” says Eduardo Farhat, a Principal at Darby Overseas Investments, the private equity arm of Franklin Templeton Investments specializing in emerging markets, “and the last five have been the brightest I’ve seen so far for ...

 For most institutional investors, there is an uncertainty about LatAm´s quality and future – and a certainty about its checkered past – that gives them pause as they investigate young managers in the region.  Most of these investors want to see a strong and sufficiently long track record from a manager, demonstrating sustained high performance, before they commit, but many of the managers cannot provide one.  This unproven inexperience is a deterrent for risk-averse institutional investors, and many choose to wait and see how a young manager grows, relying on established reputations in the meantime ... 

Vidak Radonjic, the founder and CEO of Beryl Consulting Group, which provides independent hedge fund research and advisory to family offices and institutions, recently gave ALI a window into how he evaluates LatAm managers. As an analyst, he says, he always draws comparisons between managers working in a similar space; in approaching Latin American managers, he compares them to those he finds in other emerging markets, particularly Asia.  Currently he is unimpressed overall by the limited range of investment strategies in Brazil and throughout LATAM compared to their Asian counterparts, seeing the region as lagging about ten years behind ...

 As Brazil frightens investors with threats of escalating its “currency wars” with more capital controls and China’s growth looks its weakest in two years, investors continue to search for alternatives within the emerging market space. Enter MILA, the Mercado Integrado Latinoamericano, or Latin American Integrated Market, which combines and integrates the stock exchanges of Chile, Colombia, and Peru. MILA is the culmination of a four-year process, the goal of which was to create economies of scale and scope for equities trading on the exchanges and firms operating within the region. Trading officially began in May of this year ... 

 This spring, the US-based Hedge Fund Association (HFA), a non-profit organization that aims to be the collective voice of the hedge fund industry, opened a Latin America chapter. The move marks another milestone in HFA’s global expansion program: last September it opened a European chapter and in January launched operations in the Caymen Islands. David Friedland, President of the HFA, says the expansion into Latin America made sense given the rapid growth in hedge fund activity in the region. “Just seeing the number of funds launching in Latin America, and particularly Brazil, we felt it was an appropriate time to get involved there,” … 

2010 was a transformative year for the hedge fund industry and reminded us that managing money is not the same as running a business. The significant number of small, mid-size and large fund closures in 2011 is a direct result of the multifaceted challenges facing hedge fund business operators. Managers who understand the distinction between managing money and running a business and who execute both effectively are best positioned to achieve not only investment alpha but also enterprise alpha.This paper examines the hedge fund business model and is based on our observations and numerous conversations with hedge fund managers, investors and industry experts … 

 To start off, tell me a little about your background and how or why you started Vision Brazil Investments - Prior to Vision I worked for JP Morgan and Bank of America and then founded with other partners an asset management company in 2003 called Capitania and its affiliate Vision . Starting in 2006, I have been solely dedicated to Vision, an asset management firm focusing on foreign institutional investors interested to invest in Brazilian asset classes including Real Assets.  We manage investments in four segments: agriculture renewable energy, real estate and distressed assets aside our practice in local financial markets … 

 Chile, Colombia and Peru are moving ahead with a project to join a common regional stock exchange (MILA), which they hope can compete with Latin America’s biggest capital markets for foreign investors. Strong growth in Latin America is catching the eye of many business and investors. But when it comes to decision time, Brazil is often the only financial market big and sophisticated enough to make a trade worthwhile. However, three of Latin America’s smaller, but most dynamic economies plan to combine forces to offer a viable alternative and open up their markets to local and international investors … 

 
In the past several years Latin American hedge fund managers have increasingly entered the competitive global race to win investment mandates. By and large, they have been successful.

LatAm funds were once shunned by many investors due to the “boom and bust” nature of many of the region’s economies. Coherent monetary policies were put in place in many of these regions, and as a result they developed well-capitalized banking systems with healthy credit. Many international focused investors have taken note over the past several years; those that began the due diligence process in China and India migrated to Latin America, where they have been … 

 As the football industry defies the global recession, new investment funds look to fast-track smaller clubs and untapped talent into the lucrative top European leagues.Football Funds.The spectacle of this summer’s World Cup is still fresh in the memory for the estimated 700 million people worldwide who watched Spain beat Holland in the final. Six weeks earlier, Cardiff v Blackpool at Wembley, London didn’t quite have the same glamour, or viewing figures. But with promotion to the English Premier League (EPL) —and an estimated £90 Million in additional revenues—at stake, it was officially the richest game in world football … 

 Over the past decade, several factors have converged to make Latin America one of the most exciting regions for hedge fund managers and investors. These factors include a large and growing population of high-net-worth and institutional investors, increasingly talented managers and an influx of foreign investors seeking geographic diversification.

As the size of the market has grown, so too has its level of sophistication. Just as U.S., Asian and European investors have come to demand greater levels of operational and investment excellence, Latin American investors also now expect to receive the same standards. This includes institutional quality risk management, compliance, execution … 

Project finance has been the solution for financing infrastructure needs across the world for many years now and Latin America has been no exception. The vast amount of debt and capital needed coupled with the risk involved in large-scale projects makes this technique one of the few alternatives available in the region. The Latin American Trust, also known as fideicomiso, has proven to be a useful tool in project finance. Since its regulation, regional governments have been able to attract more private sector resources into infrastructure development works. Particularly the fideicomiso is used to guarantee obligations, access … 

 Countries in Latin America are expected to invest  $450 billion USD in infrastructure assets between the years 2011 and 2015. These long-life assets are usually characterized by high development costs (design and construction) but low marginal costs of production and little to no competition once in operation. While the bulk of the investment is expected to be allocated to the surface transport and energy sectors, the water/sanitation and ports/logistics sectors are expected to see substantial increases in the current levels of investment. All across the region, the public sector is often affected by budgetary constraints and …  

 Alternative Latin Investor recently spoke with two high profile hedge fund players in Latin America, Otávio Vieira, Portfolio Manager at Safdié and Carlos Rojas Perla, Chief Investment Officer at Compass Group. We were privileged to hear how both managers felt markets had played out in 2009 and to learn of the themes they expect to dominate in 2010, as well as the strategies they were employing to best harness future returns. The impact of the global financial crisis was undoubtedly felt by Emerging Market and Latin American focused hedge funds in 2008 … 

 While the majority of hedge funds in the region have their operations located in the Brazilian cities of Sao Paulo or Rio de Janeiro, Argentina, despite the political and economic uncertainty that continues to affect the country, has attracted its share of funds as well. Almost all funds located in the country are headquartered in Buenos Aires, and use their base in Argentina as an advantage pertaining to investments in the country.The Argentine market presents significant opportunity for those hedge funds looking to examine: 1) Distressed opportunities in the corporate debt space; 2) Equities that trade at the lowest valuation in the region … 

 In the real estate world the mantra is “position, position, position”. The same may be said for hedge funds based in Latin America. Proximity to the real action gives local managers an advantage over funds managed at a distance. We would not have said this in the mid-1990s when Latin America was an intense focus of investor interest in major financial centers and there was a proliferation of emerging markets mutual funds. It was perceived that the best perspective was achieved from a distance (on high?) looking towards the region from the northern hemisphere where one could observe matters ...

Cash needy investors are hitting the hedge fund industry hard and many managers are expecting significant redemptions, at least for the first half of 2009.  In exclusive interviews with Alternative Latin Investor, Brazilian fund managers have spoken about their concerns about surviving the current worldwide economic downturn. Otavio Vieira of Safdie Private Banking expects to see a large contraction affecting Brazilian funds “Assets under management will drop a lot, in 2010 there will be perhaps only 30 to 40 percent of Assets under management when comparing with 2008 and this is causing many funds to close down”...