Brevan Howard in EM

Emerging markets are widely seen as offering better investment opportunities than developed economies, but opinions vary as which emerging markets are more promising. There’s the “Next 11” identified by Goldman Sachs (Bangladesh, Egypt, Indonesia, Iran, Korea, Mexico, Nigeria, Pakistan, Philippines, Turkey and Vietnam). Then there are those putting their money on Latin America.

Global macro manager Brevan Howard is opening an office in Brazil, according to the Financial Times. Brevan Howard is not new to emerging markets but its way of investing in the region may be changing. About a year ago this manager had a big call option on the MSCI emerging markets index, via an ishares fund that that tracks the index. The value of this investment at that time was almost $320 million.

Since then the EM index allocation has shrunk. By April 2010, Brevan Howard had $30 million in the index fund and relatively small amounts in put and call options.  It looks like the firm’s investments in EM became more targeted to specific countries and industries, less geared to buying the whole index.

One company Brevan Howard went for is Fibria Celulose SA, a Brazilian pulp and paper producer. Another is the Brazilian oil company Petrobras, which had a $87 billion record share sale last week.

Brevan Howard – a favorite with institutional investors – manages $32 billion in total.


Tags: , ,

%d bloggers like this: