Brazil hedge fund Verde gains in May on global equity rally

SAO PAULO, June 7 (Reuters) - Verde Asset Management SA, Brazil’s largest hedge fund, had a second straight month of gains in May as a global equity market rally helped offset declines in holdings of the Brazilian real and other currencies.

In a letter to investors, money managers led by Luiz Stuhlberger said Verde FIC FIM fund booked a consolidated return of 1.52 percent in May, above the 1.11 percent that Brazil’s benchmark CDI interbank interest rate returned in the period.

Verde’s equities book gained 0.74 percent, reversing a loss in April, the letter said. The fund’s currency investments shed 0.34 percent last month, the first decline in at least two months, while the fixed-income book fell 0.09 percent in May.

Verde kept increasing wagers on interest-rate future contracts and other Brazilian fixed-income instruments, citing the room for future reductions in borrowing costs, according to the letter. It also stepped up bets on future gains in the real against the U.S. dollar.

The São Paulo-based fund also participated in recent debt offering by state-controlled oil company Petróleo Brasileiro SA, the letter said, citing an attractive relation between risk and return for the company known as Petrobras.

Last month’s appointment of Pedro Parente as Petrobras chief executive officer has bolstered the outlook for the world’s most indebted oil firm, the letter said.

Recent budget deficit-reduction steps announced by interim Brazilian President Michel Temer in recent weeks are encouraging, although the impact of a sweeping corruption probe that risks toppling some of the nation’s most influential politicians could slow or derail those efforts, the letter said.

Verde FIC FIM was up 2.6 percent in January-May, below the CDI’s 5.5 percent return in the same period.

At the end of last month, Verde oversaw about 35 billion reais ($10.2 billion) in clients’ money through a number of investment vehicles. One of them is the larger Verde Master FIM fund, which had over 13.1 billion reais under administration in May, according to Thomson Reuters data.

$1 = 3.4484 Brazilian reais Editing by Alistair Bell