Ailing Hedge Funds Turn to Brazil’s Hot Private-Credit Market

Brazil’s hedge funds and equity funds are turning to private credit as stubbornly high interest rates force them to grapple with rising redemptions and shifting investor preferences.

Verde Asset Management SA, one of Brazil’s oldest and most venerable hedge funds, is among asset managers launching their first-ever credit funds. Others include equity fund house Drýs Capital, formerly known as Equitas, and private equity investment firm EB Capital Gestão de Recursos Ltda. It’s an effort to adapt to a new reality: Credit vehicles are luring away their customers.

Verde CEO Luis Stuhlberger

Photographer: Patricia Monteiro/Bloomberg

“We need to deliver good risk-adjusted returns to our clients, and ...