Key Takeaways
- • Lombard Odier Darier Hentsch (LODH) launched a long/short fund of hedge funds focused on Latin American equity markets in early June 2006, achieving $50 million in assets within weeks across 13 underlying hedge fund managers, primarily based in Brazil.
- • The fund generated positive early returns of 1.5% in June 2006, with LODH projecting an additional 1.2% gain for July, indicating strong near-term performance in the Latin American hedge fund space.
- • Fee structure features a 1.5% annual management fee with no performance fees, a $20,000 minimum investment, and dual denomination options in euros and dollars, making it accessible to institutional and high-net-worth investors.
- • The fund is domiciled in Luxembourg with administration handled by CACEIS Bank Luxembourg, providing a regulated European structure for exposure to an emerging alternative investment market.
- • LODH attributes Latin America's hedge fund industry development to economic stabilization policies and institutional reforms from the 1990s onwards, positioning the region as a maturing alternative investment opportunity.
Summary
Lombard Odier Darier Hentsch has entered the Latin American alternative investment space with the launch of a dedicated long/short fund of hedge funds targeting regional equity markets. The fund commenced operations at the beginning of June 2006 and rapidly attracted $50 million in committed capital, distributed across 13 underlying hedge fund managers predominantly located in Brazil. This swift capital accumulation reflects growing institutional appetite for Latin American alternative investment exposure.
Early performance metrics demonstrate momentum in the strategy. The fund delivered a 1.5% return in June 2006, its inaugural month, with LODH forecasting an additional 1.2% gain for July. These returns position the fund competitively within the emerging Latin American hedge fund landscape, which has experienced accelerated growth following the region's macroeconomic stabilization.
LODH's positioning commentary highlights the structural foundation underlying Latin American hedge fund development. The firm notes that hedge fund inception in the region stemmed directly from successful economic stabilization programs that contained hyperinflation during the 1990s, with the Brazilian Real Plan serving as the catalyst. The company emphasizes that institutional development, economic/political stability, and consistent regulatory frameworks were prerequisites for alternative investment infrastructure. This historical context underscores Latin America's transition from a high-inflation, volatile environment to one capable of supporting sophisticated alternative asset strategies.
The fund's commercial terms reflect a competitive fee environment. A 1.5% annual management fee with zero performance fees lowers the cost of capital allocation relative to traditional hedge fund structures. The $20,000 minimum investment broadens accessibility to qualified investors. Dual currency options in euros and dollars provide flexibility for international institutional capital, while Luxembourg domicile and CACEIS Bank Luxembourg administration ensure regulatory compliance and operational infrastructure aligned with European pension funds and institutional investors.
The launch reflects broader industry recognition of Latin America as a viable hedge fund destination, driven by deepening capital markets, improved market microstructure, and sustained institutional investor demand for regional equity exposure through sophisticated hedge fund vehicles.
Early performance metrics demonstrate momentum in the strategy. The fund delivered a 1.5% return in June 2006, its inaugural month, with LODH forecasting an additional 1.2% gain for July. These returns position the fund competitively within the emerging Latin American hedge fund landscape, which has experienced accelerated growth following the region's macroeconomic stabilization.
LODH's positioning commentary highlights the structural foundation underlying Latin American hedge fund development. The firm notes that hedge fund inception in the region stemmed directly from successful economic stabilization programs that contained hyperinflation during the 1990s, with the Brazilian Real Plan serving as the catalyst. The company emphasizes that institutional development, economic/political stability, and consistent regulatory frameworks were prerequisites for alternative investment infrastructure. This historical context underscores Latin America's transition from a high-inflation, volatile environment to one capable of supporting sophisticated alternative asset strategies.
The fund's commercial terms reflect a competitive fee environment. A 1.5% annual management fee with zero performance fees lowers the cost of capital allocation relative to traditional hedge fund structures. The $20,000 minimum investment broadens accessibility to qualified investors. Dual currency options in euros and dollars provide flexibility for international institutional capital, while Luxembourg domicile and CACEIS Bank Luxembourg administration ensure regulatory compliance and operational infrastructure aligned with European pension funds and institutional investors.
The launch reflects broader industry recognition of Latin America as a viable hedge fund destination, driven by deepening capital markets, improved market microstructure, and sustained institutional investor demand for regional equity exposure through sophisticated hedge fund vehicles.
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.