Brazil's Top Trade Is to Bet on Lower Rates, Rio Hedge Fund Says
- Truxt Investimentos says Selic rate might fall below 5%
- Fund scraps long position in Brazil stocks, is short S&P 500
Photographer: Dado Galdieri/Bloomberg
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Betting on Brazil’s central bank to further slash the benchmark interest rate is the best way to make money in the nation’s assets right now, according to hedge fund Truxt Investimentos.
“With inflation under control and slow growth, our preferred trade right now is to receive rates in Brazil,” said Mariana Guarino, a portfolio manager at Truxt, which has 10.6 billion reais ($2.7 billion) in assets under management. “Once pension reform is approved, the tail risk of a quick fiscal deterioration will be removed, so Brazil’s central bank will have room to cut rates.”