Unlike most other markets around the world where hedge funds are allowed to take almost any risks they deem fit, including leveraging their holdings to place outsized bets, Brazils hedge fund managers must comply with strict parameters, Dow Jones reports. That means they cannot take margin or collateral calls.
Whereas in the past hedge fund managers in Brazil might have rued these restrictions, they are proving to be to their benefit amid the credit crisis.
We arent likely to see funds disappear, said Walter Maciel, director of the Brazilian hedge fund Quest Investimentos. There may be some consolidation, but they wont disappear.
Elsewhere, there have been rampant predictions of the demise of as many as two-thirds of the hedge funds on the market. Small- to mid-sized hedge funds are already closing, and new hedge funds are struggling.