Dollar bet helps Credit Suisse's Verde move into the black
By Guillermo Parra-Bernal and Paula Arend Laier
SAO PAULO Oct 13 (Reuters) - Credit Suisse Group AG's CSHG Verde FIC FIM, the biggest Brazilian hedge fund, moved into the black in September after six monthly losses this year, following successful bets on the U.S. dollar.
Verde gained 6.69 percent last month, driving consolidated returns to 2.77 percent in the year through September from a negative 3.67 percent in the first eight months, the managers said in a letter distributed to investors on Monday. In comparison, Brazil's benchmark CDI interbank rate returned 7.83 percent during the same period.
Verde lost money in January, February, March, April, June and August. For the first eight months, Verde had posted its worst year-to-date return since its inception in 1997.
In a surprising performance, Verde's domestic equities portfolio posted gains in September and bets on the local interest rate futures DI yield curve reverted recent losses, the letter showed. The bulk of gains in September came from positions on the U.S. dollar, including options, as well as an exit from Japanese yen positions.
In September, the fund took the chance to keep slashing its exposure to Brazil, managers at Verde said, without elaborating. Gains in the fixed-income portfolio stemmed from a widening of the spread earned in inflation-linked government debt and a steepening of the yield curve during the presidential election campaign in the country.
Brazilian financial markets have rallied sharply in the past week as opposition candidate Aécio Neves unexpectedly surged to a strong finish in the election's Oct. 5 first-round vote, and began to surpass President Dilma Rousseff in run-off simulations. Neves is seen by market participants as more business-friendly than Rousseff of the ruling Workers' Party.
"The task of navigating through market volatility in Brazil and in the world continues to be really hard," the letter said. "That is why we are seeking to build a flexible portfolio, with positioning in options that should have very attractive returns - in case our outlook materializes."
In April, Credit Suisse and star fund manager Luis Stuhlberger, who created Verde, agreed to set up a new asset management venture with $14 billion under his control.
The venture, to be named Verde Asset Management, will open in January, with Credit Suisse and some of Stuhlberger's associates as minority partners. The deal allows Credit Suisse to retain Stuhlberger, Brazil's most successful fund manager, whose CSHG Verde FIC FIM hedge fund has posted total return of more than 8,800 percent since its creation. (Reporting by Guillermo Parra-Bernal; Editing by Richard Chang)
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