May 1, 2012
At the start of 2011, Alexandre de Zagottis, CEO at Advis Investimentos, and his two co-heads of investment, Eduardo Bodra and Julio Marote, saw an opportunity to buy options that would come into the money if Brazil reduced rates. This was a contrarian view and the options were cheap.
“The yield curve was pricing in rate hikes, which we too thought might happen, but we also believed that if the external environment deteriorated, this would be a cheap hedge,” says de Zagottis, in São Paulo.
“Options were an intelligent way to hedge against the Armageddon scenario in Europe,” de Zagottis explains. The bet paid off in spades. The Central Bank aggressively reduced rates from August when the
Times are more challenging for Brazilian fund managers, as LatinFinance’s rankings show. A more flexible buyside must look at a broader scope to hit return targets.