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Key Trends in Latin American Hedge Funds

October 2004

The number of new funds jumped over the past four years for two reasons: investment bank closures or mergers in Brazil have forced money managers to set up on their own and the increase of Brazilian onshore assets into alternatives has spurred managers to leave established houses. Success stories like Gavea and JGP have also been an inducement. From the chart below, the number of new funds reached 37 in 2003 and we expect that number to be between 35 and 40 for 2004. We gather that the total hedge fund universe, both offshore and onshore, to be around 220 funds.

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Number of New Funds Launched

The vast majority of Latin American hedge funds are based in Brazil and trading Brazilian assets. Of the entire universe, just over 50% is Multi-Strategy Macro, trading mainly three assets - bonds, equities and currencies; bonds (both corporate and sovereign) being the most heavily traded.

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Number of Latin American Hedge Funds by Strategy

Most of the Brazilian hedge fund managers are based in Sao Paulo, the country's financial capital. However we have seen a trend of new start-ups being managed out of Rio de Janeiro, which managers believe offers a better "lifestyle" environment. There are currently only three managers located in Buenos Aires, mainly running Multi-Strategy Macro, and one based in Mexico City.

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Latin American Hedge Funds by Location

The two major financial markets in Latin America are Brazil and Mexico; however the biggest trading market by far is Brazil, where over 55 hedge fund firms are located. The main reason for this is because Sao Paolo and Rio de Janeiro are where predominantly the talent and experience are located.

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Assets by Geographical Mandate

Like their peer group in Asia, most Latin American hedge funds (54%) have assets under US$100 million; there are only seven "large" Latin American hedge funds (assets over US$400 million), mostly based in Brazil, and there is no single fund with over US$1 billion.

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Number of Funds by Assets under Management

TBanco Itau has the largest prime brokerage market share, with over 41% of the market - mainly onshore hedge funds. None of the foreign investment banks are representing Brazilian onshore hedge funds. Bear Sterns, Morgan Stanley and UBS, which have strong equity research operations in Brazil, represent eight offshore hedge funds each.

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Breakdown of Funds by Prime Brokerage Market Share

Mellon Brascan and Hedging Griffo are the administrators for close to 100% of the onshore hedge fund products. CITCO, Management International and Bank of Bermuda have the largest market share for offshore Latin American/Emerging Market products.

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Breakdown of Funds by Administrator Market Share


Eurekahedge would like to thank GFIA Pte Ltd ( for providing contact information and assistance in the compilation of the Eurekahedge Latin American Database.

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