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.
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.
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.
Latin American Hedge Funds
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.
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.
Number of Funds by Assets
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.
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.
Breakdown of Funds by Administrator
Eurekahedge would like to thank GFIA Pte Ltd ()
for providing contact information and assistance in the compilation
of the Eurekahedge Latin American Database.