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Latin America focused hedge funds outperform despite regional risks, outflows; currency wars abate

Tuesday, March 05, 2013

Bailey McCann, Opalesque New York: A new data release from eVestment showed that hedge funds investing in Latin America were up 7.29% in 2012 and 1.16% in January 2013 compared to the hedge fund aggregate performance of 6.59% and 2.51%, respectively. Notably, Latin America funds experienced net investor outflows in 2012 of $860m, but performance related gains of $2.43bn offset investor redemptions for a total AUM increase of $1.57bn. January 2013 saw a $0.27bn increase in total AUM including net investor allocations of $60m. Investors have had an on again, off again relationship with emerging markets since the crisis, but Latin America has provided one of the most consistent growth stories despite broad based regional political and economic risks.

Brazil tempers currency wars rhetoric

As Opalesque reported at the end of last year, Brazilian Finance Minister Guido Mantega, accused the US of inciting a global currency war when it announced QE3, partly because the nature of US monetary policy would trigger volatile capital inflows into emerging markets like Brazil, appreciating the currency. However, that line seems to be tempering. Mantega announced that he is abandoning efforts to push down the real as the currency markets exhibit lower than average volatility.

The demand for more stimulus is growing, even as the U......................

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