John Rumsey, São Paulo
The Latin American hedge fund industry, long used to being overshadowed by other emerging markets in Asia and Eastern Europe, is moving up the scale. There has been a vigorous pick-up in interest primarily from local high-net-worth investors and, more cautiously, overseas investors. Thats been sparked by macroeconomic stability; lower interest rates pushing investors into higher-yielding products; the protracted commodities boom; the realisation by investors that theyve been allocating a tad too much money to Asia; and dazzling equity performance, particularly out of Brazil. Latin markets have matured too, with a wider spread of instruments and more trustworthy corporate governance standards, notably in Brazil and Mexico.
The dominance of Brazil in the Latin hedge fund market continues to grow. The regional giant accounts for approximately three quarters of total hedge fund assets in the region, with Argentina in a distant second place, some activity in...