Brazilian hedge funds, including Verde Asset Management, are extending their winning streak, with managers doubling down on bullish trades across local assets as easing inflation and rate-cut expectations fuel optimism, according to a report by Bloomberg.
The IHFA hedge fund index rose 1.8% in September, outperforming the 1.2% return on the overnight CDI benchmark, driven by gains in Brazilian equities, a stronger real, and falling swap rates. Year-to-date through September, hedge funds have advanced 11.8%, compared with the 10.4% gain in the CDI.
Equity exposure was the key driver, led by Verde, whose flagship fund climbed 2% last month. Verde, which manages around $2.5bn, said it expanded its long positions in Brazilian stocks amid record highs in the Ibovespa, which rose 3.4% in September to surpass 146,000 points.
Funds including Absolute Investimentos and Kapitalo Investimentos, managing $5.8bn and $4.9bn respectively, also gained through positions that profit from lower domestic interest rates.
According to Carlos Eduardo, CEO of Occam Brasil, the environment for continued easing by Brazil’s central bank supports further long exposure. Occam, which oversees $2bn, boosted its bets on lower nominal rates and saw its flagship fund rise 2.5%.
