Brazil’s largest hedge fund increases bets against euro, real and renminbi

São Paulo-based Verde oversees about 37 billion reals ($9.2 billion) in clients’ money.

Reports show that Verde Asset Management, Brazil’s largest hedge fund based out of São Paulo, has raised up bets against the euro as well as the Brazilian and Chinese currencies on expectations that U.S. interest rate hikes and slumping oil prices would continue to weigh on financial assets.

The report from Guillermo Parra-Bernal of Reuters states that Verde had started becoming net-short positioned in the euro, the Brazilian real and the Chinese renminbi and had slightly reduced its holdings of global equities.

Last year, the Verde FIC FIM fund booked a consolidated return of 28.67%, the strongest performance in nine years, the letter said. That compared with the 13.23% posted by Brazil’s benchmark CDI interbank interest rate. Last year, Brazil’s debt was downgraded by S&P due to concerns over the South American country’s near-term economic growth prospects.

Verde has been successful with Forex trades hedging under-performing equity holdings…Throughout last year according to the firm’s newsletter to clients, Verde’s short positions in some currencies helped propel its annual returns, with holdings of equities partially diminishing  final yearly gains.

Now Verde has gone bottom fishing…with Brazilian shares slumping, it is allowing the hedge fund to slowly add blue chip stocks at bargain prices, the letter said.

Brazil's Real continues to slump, what will 2016 bring? USD/BRL 5 year chart.

Brazil’s Real continues to slump versus the U.S. dollar, what will 2016 bring? USD/BRL 5 year chart.


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