Brazilian Hedge Funds, Family Offices and Fofs Say Bric Has Been Reduced to Brazil, Expect Surge of New Managers Set Profit From Current Dislocation
Opalesque, the world's largest subscription-based publisher covering the alternative investment industry, has once again united leading hedge fund managers and investors in its Brazil Roundtable, which took place Oct. 22nd 2008 at the Sao Paolo office of Bulltick Brokerage, who also sponsored the event.
Highlights from the Opalesque Brazil Roundtable - download here:
http:// www.opalesque.com/index.php?act=static&and=RoundtableBRAZIL
l Hedge fund managers forecast 3% or more growth in Brazil - will the money flow back into the country? Which strategies will benefit first?
l No systemic risk: banking and corporate sector unleveraged, efficient regulation ensures banks are well capitalized
l But: while retail lending is still completely open and set for a 10-15% growth - no bank has reduced the credit lines and the amount of money available for retail investors - corporations are in a classic liquidity trap with funds being locked in at the bank level
l Brazilian family offices and FoFs expect a surge of new managers to set up shop to profit from current dislocations
l The global hedge fund industry is now a buyers' market and no longer a sellers' market. What does this mean for managers and investors?
l The concept of hedge funds as "absolute return" vehicles or "alpha machines" has been disproved. What is the future?
l A continuation of the liquidity discussion (see http:// www.opalesque.com/index.php?act=static&and=RoundtableNORDIC)
The following experts participated at the Roundtable:
1. Luiz Felipe Pinheiro de Andrade, managing director of UAM
2. Mauricio Levi, founding partner of Fama Investimentos
3. Luiz Fernando Figueiredo, founding partner of Mauá Investimentos
4. Walter Maciel, partner, Quest Investimentos
5. Sergio Goldman, Bulltick partner and head of equity research
6. Patrick de Picciotto, partner of M Square
7. George Wachsmann - partner at multi-family office BAWM Investments
8. Otávio de Magalhães Coutinho Vieira, Director of Investments at Safdié Private Banking
9. Antonio Martin, partner at multi-family office GPS
Background on the Brazilian hedge fund industry:
Latin America accounts for 8% of the world's GDP and 8.5% of the world's population. The majority of Latin American hedge funds are focused on Brazilian markets, where most of the assets and managers are based.
Latin America is still under-represented within the global hedge fund industry. With an estimated US$45bn of assets and 169 hedge fund managers, it represents less than 2% of the total universe. However, contrary to most other hedge fund jurisdictions, Brazil has developed a diverse and well regulated onshore hedge fund industry.
About 75% of the hedge fund assets run by Brazilian managers are in the multimercado funds, the onshore vehicles. According to GFIA, ANBID and Eurekahedge, 87 Brazil based hedge fund firms manage 225 onshore funds with $29,399m of assets. Meanwhile, 43 Brazil based hedge fund firms manage 68 offshore funds with $10,187 m of assets (as of end July 2008).
Strategy breakdown for all (on and offshore) Brazil funds, as of August 2008 in % of assets:
l Macro/multistrategy: 50.4%
l Long-short equities: 23.0%
l Event-driven: 14.7%
l Fixed income: 9.5%
l Relative value: 1.7%
l Others: 0.7%
Transparency and Regulation:
Brazil's hedge industry was really started by the mutual funds industry, which means that a very transparent and regulated industry has been created. Many funds publish the NAV on a daily basis.
The purpose of the Opalesque Roundtable Series is to provide a catalogue of intelligence on the world's most important hedge fund centres and introduce some of the relevant local players of each jurisdiction. New York, London, Geneva, Stockholm, Moscow, Singapore, Hong Kong, Tokyo, Sydney, and Auckland are already covered (see the Roundtable archive: www.opalesque.com/index.php?act=archiveRT).
The Opalesque Brazil Roundtable can be downloaded here:
http:// www.opalesque.com/index.php?act=static&and=RoundtableBRAZIL
All other previously published Opalesque Roundtable Scripts can be accessed here:
http://www.opalesque.com/index.php?act=archiveRT
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In 2003, with the publication of its daily Alternative Market Briefing, Opalesque successfully launched an information revolution in the hedge fund media space: "Opalesque changed the world by bringing transparency where there was opacity and by delivering an accurate professional reporting service." - Nigel Blanchard, Culross. This hybrid financial news service, which combines proprietary industry news stories and filtered third party reports, has been credited by many industry insiders with delivering precise, accurate, and vital information to a notoriously guarded audience.
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