SAO PAULO, April 8 (Reuters) - Verde Asset Management SA, Brazil’s largest hedge fund, lost money in March for the first month in seven, after an across-the-board market rally in Latin America’s largest economy soured bets against the country’s currency, stocks and bonds.
A market rally despite the increased likelihood that left-leaning President Dilma Rousseff could be ousted 16 months into her second four-year term in office changed Brazil’s asset price trends, Chief Investment Officer Luis Stuhlberger said in a letter to investors released on Friday.
He stuck to his call that without a policy shift toward more austerity, Brazil will keep muddling through.
“Without delivering a significant, structural improvement, the country will resume the path of insolvency, contaminating risk, currency and inflation premia all along,” the letter said.
The Verde FIC FIM fund booked a consolidated return in March of minus 2.47 percent, the weakest since October 2008. That compared with a return of 1.16 percent posted by Brazil’s benchmark CDI interbank interest rate in the month.
The currency book slid 4.36 percent last month, dragging down performance more than the equities and fixed-income portfolios, which rose 1.18 percent and fell 0.31 percent, respectively.
With the U.S. dollar weakening in the wake of slower growth and a decision by Federal Reserve policymakers to delay a long-awaited interest rate increase, global risk-taking gained traction and hurt some of Verde’s positions, the letter said.
Stuhlberger’s view underscores the challenges facing Brazil and other emerging market economies as the U.S. central bank waits longer to tighten monetary policy.
At the end of last year, Verde oversaw about 37 billion reais ($10.3 billion) in clients’ money through a number of investment vehicles. One of them is the larger Verde Master FIM fund, which had nearly 13 billion reais under administration in late March, according to Thomson Reuters data. ($1 = 3.5900 Brazilian reais) (Reporting by Guillermo Parra-Bernal, editing by G Crosse)