2019 Key Trends in Latin American Hedge Funds


The Eurekahedge Latin American Hedge Fund Index was up 8.54% as of September 2019 year-to-date, narrowly underperforming the MSCI EM Latin America Index, which gained 10.24% over the same period. The market showed optimism following the consecutive rate cuts announced by the country’s central bank, which lifted the region’s equity markets. Investors also reacted positively to the approval of the pension reform in the lower house as the government saw the overhauling of the pension system critical in boosting the economic growth of Latin America’s biggest economy. Meanwhile, the region’s gross domestic product shrank in the first quarter this year for the first time since 2016. The delayed adoption of the pension reform was seen as a key reason for the weaker economic recovery of the country as international businesses were holding back their investment until the promulgation of the said reform. The Bovespa Index was up 19.18% as of September 2019 year-to-date.

Industry assets of Latin American hedge funds stood at US$61.5 billion as of September 2019, down around US$0.3 billion year-to-date. Industry population continued its streak of decline which has lasted for almost a decade, with 5 funds closing down in the third quarter of the year.

Figure 1: Latin American hedge fund industry growth

Onshore funds continued to outperform their offshore peers in 2019, and collectively managed more than 60% of the total hedge fund industry AUM of Latin America. Looking at strategic mandates, long/short equities hedge funds took the lead by gaining 9.93% year-to-date over the first three quarters of the year, while on the other end event-driven hedge fund lagged behind their peers which lost 1.45% over the same period.

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