Research

2009 Key Trends in Latin American Hedge Funds

After experiencing some challenging times in 2008 and 1Q2009, Latin American hedge funds1 have rebounded remarkably in the second and third quarters of 2009, bringing the size of the industry above the December 2008 level of US$42 billion. Based on the data in Eurekahedge Latin American Hedge Fund database, we estimate the size of the hedge fund industry in Latin America to be US$51 billion, with 417 hedge funds currently investing in the region. Latin American managers posted healthy returns of 2.46% in September, bringing their YTD performance to a strong 21.1% while also attracting capital, resulting in net positive asset flows of US$4.1 billion.

The last decade has witnessed tremendous growth in the Latin American hedge fund industry, both in terms of the number of funds as well as assets under management. The Eurekahedge Latin American Hedge Fund Index recorded impressive gains of 20% year-on-year (annualised) since December 1999, resulting in slightly more than a 5-fold increase for the 10-year period. The decade has seen the number of funds increasing four times, while the assets under management have recorded an incredible 21-fold increase. Although assets under management in the region decreased by 25% during 2008 and 1Q2009 due to the global recession and record redemptions out of hedge funds, the industry has bounced back sharply in the second and third quarters of 2009, with assets under management increasing by 22% September YTD.

Figure 1 below shows the growth in the number of hedge funds and the assets under management in Latin America since 2000.

Figure 1: Growth in the Number of Funds and
AuM of Latin American Hedge Funds

Over the years, Latin American hedge funds have been among the best performers – since its inception in December 1999, the Eurekahedge Latin American Hedge Funds Index has risen by a massive percentage. The regional managers have delivered consistent and stable returns throughout the year. As global investors look to diversify from traditional markets and asset classes, interest in Latin American hedge funds continues to grow and we expect...

 

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Footnote

1 Latin American hedge funds comprise those funds that have the region as their main geographical investment mandate.

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