WEST PALM BEACH, FL (HEDGECO.NET) – Brazilian Hedge funds lost a total of 3.8% in May according to Bloomberg news. Such a loss, the first in 15 months is causing some concern among some hedge fundinvestors, who are reportedly withdrawing some of their assets from hedge funds. Total investor assets managed by Brazilian hedge funds now stand at a total of US $11.7 billion.
The Brazilian Investment Banking Association said the declines in the Brazilian hedge fund portfolios simply mirror the global pattern. For two consecutive months, hedge funds have encountered losses of 0.23% in April and 0.58% in May. Although the confidence of global hedge fund investors remains high, as new assets are being invested with hedge fund managers, this is the first time in recent memory that hedge funds have encountered back-to-back losses.
While most hedge fund analysts remain optimistic about the chances of hedge funds near term, some hedge fund critics point to such losses as indications of possible downturn in hedge fund management vehicles.
However according to data from the hedge fund industry tracker, Tennessee Group, hedge funds are still in positive territory with a year-to-date average of 1.82%. However, such data is a far cry from the double-digit returns posted by hedge funds in the past.
The losses in Brazilian hedge funds have prompted at least two to announce they will be closing later this year. Such fear is based on perceived interest rate changes. According to published reports, the Brazilian benchmark bond due in 2040 has fallen to its nine month low this year, while at the same time the Brazilian currency has trended downwards to its 13 month low against the US dollar.
But a Brazilian hedge fund manager sees nothing drastic about the losses and closures of funds later this year. Roberto Campos Neto of Claritas Servicos Financeiros said, �What we’ve seen is much more risk aversion; perhaps this wave of withdrawals will eliminate some funds but I see that as healthy.�
Paul Oranika
Editor-in-Chief
HedgeCo.Net
Email: [email protected]
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