Brazil has been in the forefront of the Latin American hedge fund industry in terms of talent of the hedge fund managers, availability of financial instruments and improved liquidity.

The Brazilian funds are highly regulated. The fund are required to provide daily liquidity, be registered with Comissao de Valores Mobiliarios (CVM -Brazil’s local SEC), and provide a high level of transparency with the portfolio holdings reported by CVM with one month lag. Brazil is the largest of the economies in Latin America.

The equity markets in Brazil are also going through significant changes. More and more companies are adopting what called “Novo Mercado” (new economy) listings. Most of the companies issued shares with voting rights and non-voting rights. Nowadays, some of the local hedge funds have begun to play activist roles by challenging the voting share holders to adopt better business models and encouraging companies to more agressively follow the tenets of shareholder value creation. There is also increased liquidity in the Brazilian market in the recent years with more ADRs and increased shorting opportunities.