Brazilian hedge fund SPX Capital is undergoing a significant internal restructuring after a prolonged period of weak performance, client outflows and high domestic interest rates that has reshaped the country’s asset management landscape, according to a report by Bloomberg.
Founder and controlling partner Rogério Xavier has ceded day-to-day oversight of most client capital to senior partner Bruno Pandolfi as the firm seeks to stabilise performance and rebuild investor confidence following several difficult years for its flagship strategies.
Assets under management at SPX have fallen sharply from a peak of more than BRL80bn to roughly BRL49bn, as investors increasingly shifted allocations away from hedge funds and back into high-yielding local fixed income instruments amid persistently elevated Brazilian interest rates.
The firm’s flagship macro strategy has also come under pressure following a series of trading losses, including a 5.5% drawdown in March after market volatility disrupted positioning. Performance has lagged the benchmark Selic rate, which currently stands at around 14.5%, raising the hurdle for active strategies competing with risk-free returns.
The restructuring includes a reduction in SPX’s international footprint, with offices in London and New York scaled back as part of a broader cost and organisational reset. Xavier has relocated his base to Portugal, while the firm maintains a smaller presence in other global financial centres, including plans for continued client coverage in the Middle East via Abu Dhabi.
Despite the retrenchment, the firm is not abandoning its international strategy entirely. Certain partners are expected to maintain client-facing roles in global hubs, reflecting SPX’s continued focus on overseas institutional capital even as it consolidates operations.
The changes follow several years in which SPX had expanded aggressively abroad and generated strong returns through macro positioning across rates and currency markets. However, more recent performance has been marked by weaker conviction trades and increased volatility, leading to internal debate over portfolio construction and decision-making structure.
Xavier acknowledged that fragmented decision-making and a high volume of smaller positions have contributed to missed opportunities, prompting a shift toward a more concentrated approach aimed at capturing higher-conviction macro themes.
The overhaul reflects broader pressures facing Brazilian hedge funds, where structurally high interest rates have made traditional absolute-return strategies less competitive. With domestic fixed income offering double-digit yields, allocators have increasingly reduced exposure to active hedge fund strategies that have struggled to consistently outperform.
Industry participants say the environment has led to consolidation, outflows and increased performance dispersion across the sector, with only a small number of managers able to maintain strong returns through the cycle.
