Best funds: see the ten most profitable multimarkets of the last five years, according to a survey by XP

The first quarter of 2022 marked a turning point in the performance of hedge funds. After a 2021 of volatility and losses, the performance of the Hedge Funds Anbima Index (IHFA), which represents the average of actively managed hedge funds in Brazil, between January and March of this year was the best for the period in the last seven years.

The IHFA’s 6.12% return – nearly three times that offered by the CDI rate – is still being celebrated. But managers and investors know that short-term performance, while exciting, is only part of the story in this type of investment. The most satisfying results from multimarkets come with time – sometimes a lot of time.

A survey carried out by XP Investimentos identified the multimarkets with the best performance in the last five years. Funds in this category with equity from R$50 million and Long-Term tax classification, created before March 31, 2017, were considered. In the case of “mirror” funds (which invest in the same “master” funds), only the oldest entered the study.

The funds were classified according to their annualized return and also according to the excess return in relation to the CDI rate, considering the five-year window until March 31, 2022. Check out the top ten in the XP ranking:

Bottom annualized return Annualized return above CDI
MULTISTRATEGY VIEW MULTIMARKET FIC 27.22% 20.26%
SPX RAPTOR FEEDER INVESTIMENTO NO EXTERIOR FIC MULTIMARKET PRIVATE CREDIT 18.66% 12.17%
LOGOS TOTAL RETURN FIC MULTIMARKET 17.85% 11.40%
SEIVAL FGS AGGRESSIVE FIC MULTIMARKET 16.10% 9.75%
R&C HEDGE FI MULTIMARKET 15.39% 9.07%
ASA HEDGE FIC MULTIMARKET 14.23% 7.98%
IBIUNA HEDGE STH FIC MULTIMARKET 13.88% 7.65%
E2M FI MULTIMARKET STRATEGY 12.72% 6.55%
SANTA FE AQUARIUS FI MULTIMARKET 12.53% 6.37%
SOLANA EQUITY HEDGE FIC MULTIMARKET 11.89% 5.77%

Source: XP Investimentos

It is noted that among the funds with the best performance in the last five years are some that, according to a survey by the InfoMoneyalso had the most outstanding performances in the first quarter of 2022. This is the case of Vista Multiestratégia, Logos Total Return, Asa Hedge and Seival FGS Agressivo.

According to the Quarterly Management Report, also prepared by XP, which consulted 20 of the most important fund managers in the country, some trends were consolidated among the multimarkets throughout the first quarter of 2022. The number of houses with direct exposure to commodities increased, for example – nearly two-thirds of managers had this bet in March 2022, versus just over a third in December 2021.

Funds are also more confident with the Brazilian stock market, with 75% of managers holding long positions (betting on the rise) directly in stocks or through indices. The preferred sectors are Utilities (utilities) and commodities.

To a certain extent, the preferred market positions are similar to those of Vista Multistrategia, the best performing multimarket in the last five years – more than 27% per year, according to the XP survey.

The last monthly letter distributed by Vista Capital to its shareholders informs that the fund is allocated on three main fronts: purchase of commodities, especially oil; purchase of Brazilian assets, including a portfolio of domestic equities, the real and an applied position (expected to decline) in interest rates; in addition to a short position (with a bet on the fall) in the US markets, as a way of roofor portfolio protection.

Likewise, betting on commodities provided some of the highest returns of the quarter for other star multimarkets – such as Seival FGS Agressivo. From January to March, the portfolio yielded 13.68%, with this asset class alone providing gains of 12.69%.

For Vista, the optimism with Brazil is precisely related to this. “It seems to us that the market overestimates the economic effects of the electoral cycle and underestimates the positive effects of the commodity cycle and the post-pandemic reopening”, says the manager’s letter.

In the case of ASA Hedge, the perception for commodities is also positive, but one of the main recent contributions to the fund’s performance was a position taken in US interest rates, benefited by the beginning of the rise in rates in the country and the expectation of continuity of this movement.

“In a way, part of the explosive movement [dos juros] throughout the month it was a return to the risk aversion that the beginning of the war in Ukraine caused in the markets”, says the manager in her last letter to the shareholders. “The other part, however, was a fair reaction to the continued hardening of the FOMC’s speeches, increasingly disconnected from the inflationary reality of the American economy.”

long term focus

If in the last five years these multimarkets managed to obtain a positive performance, it was not without surprises here and there. For this reason, Carolina Oliveira, Rodrigo Sgavioli and Clara Sodré – authors of the XP survey – reinforce the “mantra” of the long term.

“We know that investors often invest with the conviction that they will have the patience and resilience to go through moments of crisis or poor performance. However, emotions arise when the fund’s profitability is bad (panic) or, on the contrary, when it is doing very well (euphoria)”, they say in the text.

Even for excellent managers, the moments when many investors make redemptions analyzing short time windows penalize the funds. “And then the investor ends up losing double: when he exits at the worst possible moment; and when it fails to gain from the resumption of the fund and/or the asset class as a whole”, emphasize the authors of the survey.

According to the text, the most important attitude in the long term “is to be invested”. “There are several studies that prove that being invested in the right asset classes, in a diversified way, already guarantees something like 70-80% of the return on your long-term investment portfolio”, he highlights.

Apart from the risk related to tax inefficiencies in the early bailout. “Many investors redeem from hedge funds even when they have positive returns in short windows (less than 2 years), but below or very close to the CDI. On these occasions, in case of redemption, there will be an incidence of Income Tax and, the shorter the term invested, the higher the IR rate used”, says the text.

The conclusion is that it will hardly be possible to extract the best result from hedge funds in the short term. “Invest with the conviction of staying invested for at least 3 to 5 years, if there are no serious unforeseen events along the way, either with your assets or with some relevant fact related to the manager”, say the authors.

What do XP experts recommend for you? Click here for a free investment simulation without robots