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Verde cuts Brazil bets following 3.8% April loss

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A 3.8% decline in April has prompted Brazilian hedge fund Verde Asset Management, which has a track record of strong performance since launching in 1997, to pare its bets on both domestic stocks and falling interest rates, according to a report by Bloomberg.

The loss after fees was the firm’s largest monthly decline since late 2021 and its worst April performance since 2003. By comparison, the CDO interbank benchmark rate gained 0.9% over the month, while a basket of local stocks fell by 1.5%, according to data compiled by Bloomberg.

The report cites a note sent to investors revealing that Verde has implemented “substantial changes” to its portfolio after the administration of President Luiz Inacio Lula da Silva weakened the country’s fiscal target for 2025, by trimming its exposure to the country’s stocks and practically scrapping bets on falling local interest rates.

Verde wrote: “Any illusion that the government would pursue some discipline, however small, has fallen apart.”

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