Brazilian hedge fund industry is fast emerging as an important player in the Latin American hedge fund market. At present two drifts are noticeable. One is - foreign investors looking for local players through whom they could invest, and the second - a fund or funds evolving their strategies.

Investors are having a second look towards Latin American (LatAm) investments; earlier they shied away from them. Hedge funds in LatAm have gradually moved to the longer-term side of international institutions' and high net worth individuals' portfolios. There are prospects aplenty for those knowing how to make use of them. Monetary and fiscal discipline saw a rise in central bank's reserves and a fall in fiscal budget. In the last three years, an important de-leveraging process has taken place in the private sector with increases in exports to the fast growing economies of India and China, courtesy debt refinancing at favorable conditions. Commodities lead these exports. Growing number of locally-based managers are attracted by various risk-lowering factors. These managers represent themselves as a new breed of market leaders. Earlier, international players dominated the LatAm investment industry in the long-term. Later, the local independent management groups developed in the region challenging the dominance of the international financial institutions.

Meeting the emergence of a new breed of managers the new focus on LatAm alternative assets washed away considerable returns at home amidst foreign players. The new focus represents coming full circle in a cycle that began in 1990s when the developing markets were in vogue. Having a major share in the regional industry with more than 220 dedicated funds and assets in excess of $25 bn, Brazil plays a vital role in the LatAm hedge fund market. One factor that distinguishes Brazil from Argentina, Mexico and Chile is that the former has domestic investment banking industry. The reason why foreign investors are planning to invest in Brazil is that there are very less number of managers with long track record in the industry. And the people prefer to give money to those individuals whose professional experience is a minimum of 20 to 30 years, and unfortunately, there are not many in Brazil.

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