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Alternative Market Briefing

'Triggers’ help hedge funds achieve outperformance when investing in LatAm

Monday, March 28, 2016

Komfie Manalo, Opalesque Asia:

Investors have been looking at the diverse investment landscape in Latin America again, not only since Barack Obama's trip to Argentina last week. Andres Baez, a partner and fund manager to two funds at LW Investment Management, said at the recent Opalesque 2016 LatAm Roundtable that there are at least three things professional investors do not compromise when investing in Latin America. But the number one issue he is looking for when assessing the potential for outperformance are triggers, he said.

Baez pointed to Argentina when he offered the following example for a trigger: "We saw that in Argentina almost three years ago when the Supreme Court ruled that Christina Kirchner could not get re-elected, and that’s when we invested heavily in Argentina. We went up to 30% of our portfolio in Argentinean corporate and sovereign debt."

The second issue that investors are interested for is the rule of law. Baez said that the rule of law is tricky in Latin America. The important thing is, especially when dealing with less-liquid investments, is that investors do not compromise in the structure they want around their investment. "If you cannot get the structure you want for your investment, you’re out," he stated.

He added that while the rule of law might be tricky in Brazil, it is almost......................

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