Latin America is rewriting the rules of alternative investing.

Alternative investments are no longer a niche reserved for institutional investors. In Latin America, private equity, private debt, infrastructure and real assets are rapidly gaining traction as pension systems liberalize, wealth managers expand access and fintech platforms lower barriers to entry. Data from Preqin’s 2025 Latin America investor survey show that 60 % of regional allocators plan to increase exposure to private debt, while 40 % intend to boost private equity allocations and 41 % intend to add infrastructure. Cerulli Associates’ 2024 distribution study reports that wealthy individuals in the region invested at least US$1 billion in alternative products sold via offshore platforms in 2023 and that pension systems in the Andes and Mexico held more than US$71 billion in alternatives—up from US$46 billion in 2020.These figures underscore a structural shift: alternative investments are becoming mainstream in Latin America.

This article examines the current state of the region’s alternative investment landscape, with a particular focus on Brazil, Mexico and Chile. It assesses the drivers of growth, including favorable regulatory frameworks, burgeoning fintech ecosystems and cross-border capital flows, and explores how tokenization and digital distribution could accelerate democratization. The paper also highlights challenges such as macroeconomic volatility, regulatory fragmentation and limited liquidity. Finally, it offers practical insights for asset managers and wealth managers seeking to navigate and capitalize on Latin America’s evolving alternatives market.

Introduction

Global demand for alternative assets has grown significantly over the past decade as investors seek diversification, higher yields and uncorrelated returns. While institutional allocators dominated early adoption, democratization is accelerating. According to a Preqin investor survey, 60 % of Latin American investors plan to increase private debt allocations, 40 % intend to increase exposure to private equity and 41 % plan to add infrastructure. At the same time, wealth managers and fintech platforms are making alternative strategies available to high-net-worth individuals and even retail investors. Cerulli Associates notes that wealthy LatAm investors poured at least US$1 billion into alternative products sold via U.S. offshore managers in 2023, and that figure is expected to double in 2024.

This influx of capital is taking place amid significant macroeconomic and regulatory shifts. After years of monetary tightening, central banks in the United States and Europe have signaled an easing cycle, prompting cross-border capital flows into emerging markets. ECLAC reports that bond issuance by Latin American and Caribbean issuers jumped 36 % to US$122 billion in 2024, reaching a three-year high. Sustainable bond issuance—including green, social and sustainability-linked deals—also increased to US$33.1 billion. Foreign direct investment (FDI) into the region rose 7.1 % to US$188.96 billion in 2024, with Brazil attracting 38 % of flows and Mexico 24 %. These figures show that international investors are looking beyond traditional public markets for exposure to the region’s growth opportunities.

The Market Landscape: Segment Growth and Investor Demand

Private Credit

Private credit has emerged as Latin America’s most sought-after alternative asset class. Preqin’s survey shows that 60 % of regional investors plan to increase private credit allocations.Several factors drive this enthusiasm:

• Yield premium and diversification. Global private credit assets have grown from roughly US$1 trillion in 2020 to US$1.5 trillion by early 2024 and are projected to reach US$2.6 trillion by 2029. Latin America offers a particularly attractive yield premium due to higher real interest rates and a relative scarcity of non-bank financing.
• Regulatory liberalization. Many Latin American pension systems, such as Mexico’s Afores and Chile’s AFPs, have loosened limits on alternative investments. Cerulli reports that pension funds in the Andes and Mexico held more than US$71 billion in alternatives at the end of 2023, a sharp rise from US$46 billion in 2020.
• Tokenization and fintech innovation. Brazil’s AmFi platform and other fintechs are pioneering tokenized private credit products. A landmark report, “Project Aurora,” estimates that Brazil’s private-credit market represents a US$2 trillion opportunity. By converting receivables and structured loans into blockchain-based tokens, AmFi reduces issuance and distribution costs by up to 38 % and enables fractional ownership. To date, more than US$300 million of private credit has been structured on its platform.

Private Equity and Venture Capital

Private equity activity in the region has rebounded after a slowdown during the pandemic. Funds and direct investors are eyeing technology, consumer goods and infrastructure as key sectors. Preqin’s survey indicates that 40 % of Latin American investors intend to increase private equity allocations. Meanwhile, venture capital funding for Latin American startups jumped 26 % in 2024, according to various press reports. Although cross-border deals can still be constrained by currency volatility and political uncertainty, global managers are engaging through co-investment platforms, feeder funds and structured notes.

Infrastructure and Real Assets

Infrastructure investments—particularly in renewable energy, transportation and digital connectivity—are integral to the region’s growth strategy. A significant proportion of cross-border bond issuance is funding infrastructure projects: ECLAC notes that sustainable bond issuance reached US$33.1 billion in 2024. In Brazil, new concessions and public-private partnerships are creating opportunities in toll roads, sanitation and electricity transmission. In Mexico, the government’s nearshoring policy has triggered private investment in logistics hubs along the U.S. border. Chile, meanwhile, is attracting capital to its mining and renewable-energy sectors.

Real Estate and Hedge Funds

Real estate remains a core alternative allocation in the region, driven by urbanization, demographic growth and corporate demand for modern logistics facilities. Brazilian real estate investment trusts (FIIs) and Mexican development trusts (FIBRAs) provide regulated vehicles for domestic investors, while international investors often access the sector via private equity or debt strategies. Hedge fund activity in Latin America is less developed than in North America or Europe but is gaining momentum; Preqin data show moderate inflows as allocators seek alpha strategies that can hedge regional macro risks.

Regulatory and Policy Landscape

Brazil

Brazil has the largest and most advanced alternative investment ecosystem in Latin America. The central bank’s Pixinstant-payments system has transformed retail and business payments, creating infrastructure that supports digital asset issuance. Brazil’s securities regulator (CVM) and central bank have been proactive in creating regulatory sandboxes and clarifying tokenization rules. The Projetos Aurora report emphasizes that Brazil’s private-credit opportunity is supported by one of the world’s most advanced financial infrastructures and a progressive regulatory framework.

Tokenization has already gained traction. The Brazilian blockchain association ABcripto notes that tokenized asset offerings reached R$1.3 billion in 2024, with volume expected to grow further in 2025. Tokenization simplifies asset origination and transfer, reduces bureaucracy and costs, improves transparency through blockchain-based ledgers and enhances inclusion and liquidity. Recent regulation allows crowdfunding platforms to issue digital fixed-income tokens under specific limits. Together, these factors position Brazil as a global benchmark for regulated tokenization. 

Mexico

Mexico is Latin America’s second-largest economy and a pivotal market for alternative investments. Mexican pension funds (Afores) have long invested in domestic infrastructure and private equity funds. According to Cerulli, pension systems in the Andes and Mexico collectively held more than US$71 billion in alternatives at the end of 2023. Mexico’s regulators have expanded investment limits for Afores and introduced open finance rules similar to those in Europe and the U.K. QED Investors note that Mexico is exploring a central bank digital currency (CBDC) and regulatory sandboxes for blockchain projects. Banks and fintechs are adopting API standards to promote data portability and integrated services. These developments could accelerate digital onboarding and cross-border capital flows.

Chile

Chile boasts one of the most sophisticated financial systems in Latin America, underpinned by a long-standing mandatory pension system (AFP). The Fintech Law enacted in January 2023 promotes innovation and financial inclusion, requiring fintechs to register with the Commission for the Financial Market (CMF), comply with transparency and cybersecurity standards and disclose costs and risks to customers. The law also lays the groundwork for open finance, enabling consumers to share financial data securely and encouraging competition. Chile’s new open finance system (Sistema de Finanzas Abiertas) is scheduled to begin gradually on 4 July 2026. The combination of strict prudential rules, a transparent regulatory environment and early adoption of technology has attracted international investors to Chilean private equity, infrastructure and renewable-energy projects.

Cross-Border Capital Flows and Investor Behavior

Latin America’s alternative investment growth is closely tied to cross-border capital flows. ECLAC reports that international bond issuance by Latin America and Caribbean issuers jumped 36 % to US$122 billion in 2024, demonstrating renewed foreign appetite for the region’s debt. Sustainable bond issuance reached US$33.1 billion, indicating rising demand for ESG-linked instruments. Cerulli highlights that wealthy individuals invested at least US$1 billion in alternative products sold via U.S. offshore managers in 2023, a figure expected to double in 2024.Moreover, Latin American pension funds in the Andes and Mexico increased alternatives exposure from US$46 billion in 2020 to more than US$71 billion in 2023.

In terms of geography, investors are increasingly viewing Latin America itself—especially Brazil and Mexico—as offering the most attractive opportunities. The Preqin survey notes that 67 % of professionals expect the best investment prospects in these countries, compared with 79 % who favored North America in 2024. This sentiment shift reflects both improved economic prospects and the potential for higher returns due to valuations and currency considerations. At the same time, investor satisfaction with foreign exposures remains high: 38 % of respondents said their international private debt portfolios exceeded expectations, compared with 22 % for domestic private debt; 18 % said international private equity exceeded expectations versus 9 % domestically.

Technology and Innovation as Catalysts

Digital Payments and Open Finance

The rapid adoption of digital payments and open finance is transforming financial services across Latin America. The Inter-American Development Bank (IDB) notes that the share of adults with a financial account in the region rose from 50 % in 2017 to about 70 % in 2024, with more than half of account holders accessing services digitally. Real-time payment systems and interoperability mandates, such as Brazil’s Pix and Argentina’s interoperable QR codes, have scaled digital payments and lowered transaction costs. Fintech investment reached nearly US$14 billion at its peak in 2021, and after a correction, venture funding rebounded in 2024 with US$1.2 billion in deals in the first half.

Open finance initiatives are gaining momentum. Chile’s Fintech Law establishes a national framework for data sharing, while Mexico and Brazil are rolling out API standards for banks and fintechs. The IDB notes that open finance policies and data portability reduce switching costs and foster competition. These frameworks are essential for alternative asset distribution, enabling wealth managers to access client data, automate suitability assessments and streamline KYC/AML processes across jurisdictions.

Tokenization and Blockchain

Tokenization offers the most profound long-term impact on Latin America’s alternatives market. Brazil is leading the charge: ABcripto reports that tokenized asset offerings totaled R$1.3 billion in 2024 and expects volumes to grow in 2025. Tokenization reduces bureaucracy and costs, improves transparency via immutable ledgers and allows fractional ownership. The AmFi/Helix partnership demonstrates how tokenization can reduce issuance and distribution costs by up to 38 % and open a US$2 trillion private-credit opportunity in Brazil.

Elsewhere, Mexico’s regulator is exploring blockchain use cases within regulatory sandboxes, while Chile’s Fintech Law encourages experimentation with digital assets. As tokenization platforms mature and regulatory clarity improves, investors will gain access to diversified portfolios of private equity, credit and infrastructure at lower minimums and with potential secondary-market liquidity.

Regtech and Artificial Intelligence

Regulatory technology (regtech) is another enabler. QED Investors highlight that Latin American regulators, particularly in Brazil, are transparent and collaborative, using regulatory sandboxes and AI-driven tools to streamline compliance. Technology can automate due diligence, monitor risk exposures and facilitate cross-border distribution by ensuring that offerings comply with local regulations. The IDB notes that responsible AI can expand credit access by leveraging alternative data while maintaining consumer protection.

Implications for Asset Managers

1. Local Partnerships and Structuring – Asset managers aiming to enter Latin America should consider partnering with local firms that understand regulatory nuances. Brazil’s CVM and Central Bank encourage innovation but require compliance; working with tokenization platforms such as AmFi can reduce time-to-market by leveraging existing licenses. Managers should also explore separate feeder funds or structured ETNs to optimize tax and distribution across jurisdictions.
2. Customization and Product Design – Investors in the region have diverse risk appetites and regulatory constraints. Offering a range of structures—such as interval funds, tender offer funds, or tokenized notes with lower minimums—can widen the potential investor base. Data from Cerulli show that affluent individuals are warming to private credit and private equity; products tailored to their liquidity needs and tax considerations will be in demand.
3. ESG and Impact Integration – Sustainable investment is increasingly important. The surge of green and social bond issuance suggests that investors are looking for strategies aligned with climate and social goals. Asset managers should integrate ESG factors into due diligence and reporting, recognizing that regulatory requirements may differ by country.
4. Technology Investment – Managers must invest in digital distribution, reporting and compliance systems to remain competitive. Open finance and API frameworks allow real-time data sharing; regtech and AI can streamline onboarding and monitoring; tokenization can lower costs and expand access. Firms that embrace technology will be better positioned to scale.

Implications for Wealth Managers

1. Diversification and Client Education – Wealth managers should educate clients about the benefits and risks of alternative assets, including illiquidity and credit risk. The Preqin survey indicates that investors who diversified internationally saw better performance, underscoring the value of cross-border allocations.
2. Platform Selection – To capture the growing demand, advisers need access to platforms that offer a broad menu of private funds, tokenized notes and digital securities. Cerulli emphasizes that placement on widely used platforms is critical to attract retail assets.
3. Regulatory Awareness – Wealth managers must stay abreast of evolving regulations across jurisdictions. Chile’s Fintech Law, Brazil’s CVM rules and Mexico’s open banking initiatives each have unique requirements. Advisors should work with compliance specialists to ensure proper disclosures and suitability assessments.
4. Liquidity and Gate Provisions – For pension clients, liquidity terms and gate provisions are as important as investment strategy. Wealth managers should evaluate whether structures like interval funds or tokenized notes provide adequate liquidity without compromising returns.

Future Outlook: Opportunities and Challenges

The next five years will likely see continued growth in Latin America’s alternatives market, but the path will be uneven across countries and asset classes. Key opportunities include:

• Institutionalization of tokenized assets. Platforms like AmFi are moving from pilots to fully institutional adoption, enabling global investors to access Brazilian private credit directly. As regulatory frameworks mature, tokenization could extend to real estate, infrastructure and private equity.
• Expansion of pension participation. Chile’s planned open finance system and Mexico’s regulatory reforms could unlock additional capital from pension funds. Policymakers see alternatives as a tool to finance domestic infrastructure and promote economic development.
• Cross-border collaboration. Partnerships between Latin American and Asian or North American investors—such as AmFi’s collaboration with Helix—could channel foreign capital into regional projects while offering diversification for overseas investors.

Challenges remain. Economic volatility, currency risk and political uncertainty can deter international investors. Regulatory fragmentation across countries complicates fund structuring and compliance. Liquidity remains limited for many private investments, and valuation methodologies are evolving. Technological adoption is uneven; while Brazil and Mexico are leading, other jurisdictions lag.

Conclusion

Latin America is at a turning point in alternative investments. Investor appetite is rising, underpinned by liberalizing regulations, digital innovation and a desire to diversify away from traditional equities and bonds. Brazil’s progress in tokenization and private credit, Mexico’s open finance initiatives and Chile’s fintech legislation demonstrate that the region is building the infrastructure necessary to support long-term capital formation. Cross-border capital flows are increasing, with sustainable bonds and private credit attracting global investors. At the same time, local investors are becoming more sophisticated and demanding greater access to global opportunities.

For asset managers and wealth managers, success in Latin America will hinge on understanding local market dynamics, collaborating with on-the-ground partners, embracing technology and designing products that balance return potential with appropriate liquidity and risk controls. Those who invest early in the region’s alternative investment ecosystem may benefit from structural growth, diversification benefits and the opportunity to shape the future of finance in one of the world’s most dynamic markets.

Key Takeaways

1. Rapidly Growing Demand: A majority of Latin American investors plan to increase allocations to private debt (60 %), private equity (40 %) and infrastructure (41 %) reflecting a broad shift towards alternatives.
2. Rising Cross-Border Flows: International bond issuance rose 36 % to US$122 billion in 2024; wealthy individuals invested at least US$1 billion via offshore platforms and pension systems hold over US$71 billion in alternatives.
3. Brazil as a Tokenization Leader: Brazil’s private-credit market represents a US$2 trillion opportunity; tokenization platforms like AmFi reduce issuance costs by up to 38 % and have already structured over US$300 million.
4. Policy Innovation Matters: Chile’s Fintech Law and forthcoming open finance system, Mexico’s open banking initiatives and Brazil’s sandbox regime are crucial for attracting investment and safeguarding investors.
5. Technology and ESG are Essential: Digital payments, open finance and tokenization are catalysts for access, while sustainable bond issuance (US$33.1 billion in 2024) highlights the importance of integrating ESG considerations.