Armínio Fraga knows a thing or two about how to handle a lousy economy. The former emerging-markets portfolio manager at Soros Fund Management and founder, chairman and CIO of 7.4 billion-reais ($3.25 billion), Rio de Janeiro–based investment firm Gávea Investimentos once served as president of the Banco Central do Brasil. In 2002, during Fraga’s tenure at the central bank, left-wing union leader Luiz Inácio Lula da Silva won election to the nation’s presidency, an event that rattled markets and sent the real plummeting more than 50 percent against the dollar.
Fraga reacted swiftly, pushing overnight rates up to 25 percent and convening leaders from opposite ends of the political spectrum to smooth out the economic transition. By the end of 2003, rates had tumbled to 16.5 percent.
For Fraga, 56, the experience was good practice for handling this year’s turbulent market conditions in Brazil. He happens to run one of the country’s best-performing hedge funds this year, Gávea Macro
This is the start of an article on alternative asset managers in Brazil. To see the full article, please go to Institutional Investor's website (wwwinstitutionalinvestor.com).