You are Valeria Ortega, chief economist of Nexus Capital Advisors in Mexico City. A pension trust has just handed you 100 million dollars to spread across Brazil, Mexico and the Andean countries, and it wants the first allocation before today's market close.
The situation
Wednesday, 15 October 2025, 7:30 a.m. Arturo Garza, chief investment officer of the Fideicomiso de Pensiones Altamira, confirms by email that the committee is handing Nexus tactical control of 100 million dollars. Nexus advises 23 institutional clients across the region, but until today it only recommended; this is its first mandate in which it decides. You spent nine years at a central bank and four signing the firm's quarterly report. You have never answered for a portfolio with your name on it.
The portfolio arrives 15% in Brazil, 10% in Mexico and 15% in Peru and Colombia; the other 60% sits in US dollar cash, and only a fifth of the Latin American exposure is hedged against the dollar. The trust's policy allows at most 40% in Brazil, 30% in Mexico and 30% in the Andean pair. There will be five reviews, and the portfolio you leave at each one is the one you take into the next.
The environment does not help. The Federal Reserve sits at 4.5%, the dollar is strengthening against emerging currencies, oil trades near 78 dollars and copper near 3.85 dollars a pound. Brazil pays the region's highest policy rate, 12%, but it also has the highest inflation (4.5%), the currency that has fallen most this year (−8%) and the widest sovereign spread (380 basis points). Peru has the lowest inflation and the least external debt. Mexico sits in between.
Garza has been clear: the trust pays pensions and cannot afford a large loss, but it will not pay fees for money sitting idle in dollars. Thiago Sousa, your Brazil analyst, argues that no market in the region pays as well for waiting. Paula Méndez, head of risk, wants less Brazil and more hedging, even though hedging costs money every period. Garza will judge the mandate on two things: how much the portfolio grows, and how much risk was run to get there.