Brazilian hedge funds outperform global competitors with simple strategy

June 17th, 2011
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Brazilian hedge funds such as Credit Suisse Hedging Griffo, Brazil’s largest hedge fund, have been consistently outperforming their American and European competitors for the last 10 years. According to an article from Bloomberg, from 2001 to 2010, Latin American hedge funds, particularly Brazilian hedge funds, outperformed every other region in the world.

The consistent high performance is driven by the unstoppable growth of the Brazilian economy. The Brazilian 2-year bond has averaged 17% returns per annum since 2001 while the Brazilian Bovespa stock index averaged 16% per annum. This allows for a simple strategy for Brazilian hedge funds, called the “Brazil Kit:” 2/3 of capital is allocated to bonds, the rest to equity markets and foreign exchange or interest rates. However, this simplicity is also reinforced by Brazilian regulatory rules. Brazilian hedge funds are required to disclose holdings and ensure quick redemption for investors, limiting the amount of risky investments they can make compared to their less-regulated global counterparts.

The performance of Brazilian hedge funds has been turning heads. Recently, Highbridge Capital Management bought a controlling stake in Rio de Janeiro-based Gavea Investments. Credit Suisse bought its controlling stake of Hedging Griffo in 2007 for $364 million.
For Detailed Investor Profiles on these Investors, click below:
Highbridge Capital Management
Related People: Glenn Dubin; Henry Swieca*; Mary Callahan Erdoes (JPM); Scott Kapnick; Todd Builione
Related Entities: Highbridge Capital LP; Highbridge Convertible Arbitrage Opportunities Fund; Highbridge Event Driven Relative Value Fund LP; Highbridge Long Short Equity Fund LP; Highbridge Statistical Market Neutral mutual fund; JPMorgan Chase & Co
Related Article Tags: Multi-Strategy, Long Short, Equity, Debt and Global Macro Hedge Fund News


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