Goldman Sachs Group Inc., UBS Group AG and Deutsche Bank AG are among banks profiting as the growth of Brazilian hedge funds forces them to look overseas to fuel returns.
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The lenders’ global-markets units are benefiting the most by providing liquidity, lending securities and executing simultaneous trades in different regions for the nation’s hedge funds. UBS’s Brazil asset-management clients increased their US futures investments by 10% this year, according to the Zurich-based bank.
At Goldman Sachs, revenue from Latin American client-related businesses reached a record this year, according to Ricardo Mora, co-head of the region at the New York-based bank. He said the global-markets division, which includes sales and trading and the prime-brokerage unit, was the main driver.
“Brazilian investment funds were among the biggest participants in global rates markets,” and Goldman Sachs helped them navigate macroeconomic trends, Mora said in an interview.
Brazil’s hedge fund industry more than tripled over the past decade to about 1.6 trillion reais ($300 billion) in assets under management. Many funds started investing abroad years ago, mainly in other Latin America nations or emerging markets, especially Mexico, though they also moved into Turkey and South Africa. This year, several have boosted their investments in developed nations and Asia.
“Portfolio managers in Brazil have the same mindset as any global macro hedge fund in other jurisdictions — they just happen to be domiciled in Brazil, but are thinking globally,” Mora said. Macro hedge funds are actively managed funds that attempt to profit from broad market swings caused by political or macroeconomic events.
Read the full article here by Cristiane Lucchesi, Vinícius Andrade, Advisor Perspectives.
