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Brazil leads the hedge fund field

While one country goes from strength to strength, the rest of Latin America is seeing very slow growth in funds. Helen Avery looks at the opportunities available to managers in the region.

Of THE 148 hedge funds based in Latin America, only nine are outside Brazil, according to figures from Eurekahedge. Over the past two years, the hedge-fund market in Brazil has become increasingly mature. Multi-mercado funds, which are essentially mutual funds for domestic retail investors that can invest in several asset classes, and predominantly run a Brazil-only macro strategy, number more than 4,000. Onshore hedge funds that have structures similar to those in the US and Europe for high-net-worth clients and institutions number 139, up more than 30% on two years ago.

Peter Douglas, founder of hedge fund consulting firm GFIA in Singapore, runs the first fund of hedge funds to go into Latin America, which launched in 2005. He holds the market in high regard. "Brazil is by far the most sophisticated domestic hedge fund market in the world. It is well-regulated and transparent," he says. Douglas says his firm’s Latin American fund of hedge funds has outperformed the global fund of hedge funds sector by a couple of percentage points. According to Eurekahedge, Brazilian onshore funds are outperforming the Latin America hedge fund index and the global hedge fund index this year (see chart).

For outsiders, it is easy to assume that managers have been performing simply by riding the Brazilian wave.

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