Alternative Investments in Brazil: The Buys from Brazil

Down South, Brazil’s alternative-investment industry appears to be thriving. The country’s private equity and hedge-fund industry has successfully attracted welcome international attention, and money pouring in. But why there? And why now? Experts have pegged the maturing of the country’s capital markets as well as a decline in interest rates. However, while Brazil’s equity markets are liquid, concentration remains a problem for hedge funds – with eight companies holding more than 50% of the market value of the BM&FBOVESPA. Funds also need to comply with strict requirements for transparency and liquidity, and some fund managers have expressed frustrations that the regulatory system costs them their edge, as then others know what they are up to. At the end of the day, Brazil is still an emerging market, and with any emerging market, however successful, comes a multitude of risks.

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