Credit Suisse-Backed Hedge Fund Brings New Strategy to Brazil

(Bloomberg) -- Canvas Capital SA, an alternative-investment firm backed by Credit Suisse Group AG, is offering individuals a hedge fund with a new type of strategy for Brazil that gives exposure to diverse types of highly traded assets.

The fund, called Canvas Vector FIC FIM, is one of the first to offer retail clients an “alternative risk premia” strategy, which focuses on comparative returns between diverse assets such as currencies, credit, stocks, commodities and interest rates, according to people familiar with the matter who asked not to be named because the matter is private. The fund, which invests in more than 45 countries, is denominated in reais but doesn’t buy any Brazilian assets, according to the people.

The strategy is targeting individuals seeking to diversify their investments as the central bank keeps its benchmark rate at a record low of 6.5%. Brazil’s fund industry had net inflows of 33.6 billion reais ($8.7 billion) this year through April, according to Anbima, the capital-markets association. Hedge funds posted 5 billion reais in inflows, and 15.2 billion reais flowed into equity funds.

Canvas Vector, which uses a proprietary algorithm developed by fund manager Francisco Funari, has returned 27% since its start in December 2017 through June 19, or 17 percentage points more than the benchmark interbank interest rate DI, according to data compiled by Bloomberg. Returns don’t depend on directional bets from its managers because the fund uses so-called carry strategies, such as buying a currency with a high yield and funding the trade with a lower yielding one. It has a goal of returning DI plus 5.5% a year.

Canvas, which has about 6.7 billion reais under management in all of its funds, is also opening to retail investors its long-bias equity fund. Called Canvas Dakar Long Bias FIC FIM, it’s returned 39% since it was founded in December 2017 through June 19, 6 percentage points more than the stock benchmark, Ibovespa.

To attract and retain top executives in Brazil, Credit Suisse started giving them stakes in asset-management companies, including Canvas. The bank holds a minority, non-voting stake in the firm, which was created in 2012 with Antonio Quintella, who previously led the Americas for the Zurich-based bank. Quintella is Canvas’s chief executive officer and a controlling partner.

To contact the reporter on this story: Cristiane Lucchesi in Sao Paulo at clucchesi5@bloomberg.net

To contact the editors responsible for this story: Michael J. Moore at mmoore55@bloomberg.net, Steve Dickson, Dan Reichl

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