Latin America set to make an impact in 2007

Wed Apr 11, 2007





Peter Douglas, principal, GFIA

The inherent market inefficiencies and wealth of talented managers with available capacity* in the Latin American hedge fund universe has made regionally based funds attractive to both Latin and foreign investors. The assets and instruments in the region are very liquid, notably fixed income and derivatives, while high market volatility reduces the need for leverage to increase returns. Offshore Latin hedge funds are structured similarly to their peers globally, are generally more satisfactorily administered than their Asian counterparts, and have lower regulatory and systemic risks than comparable funds elsewhere.

The Latin American hedge fund industry now comprises approximately 310 funds, which manage at least $44 billion in total assets, or around 3% of the total hedge fund universe. However, precise asset figures are difficult to come by as some managers do not report to the relevant databases. Nevertheless, a good deal of the growth has been...

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