Mon, Oct 20, 2014
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

HFR: Emerging markets hedge funds post strong gains in 2012 and this year, and increase in numbers to 1,100+

Friday, February 22, 2013
Opalesque Industry Update – Emerging markets hedge funds posted strong gains to conclude 2012 which continued through early 2013, as stimulus measures in developed markets contributed to EM currency and equity market gains. The HFRX Multi-Emerging Markets Index gained +13.1 percent for 2012, including a gain of +4.8 percent in 4Q, with contributions across each of the BRIC (Brazil, Russia, India, and China) economies.

Hedge fund capital invested in Emerging Markets increased by $11.2 billion during the fourth quarter of 2012 to a record of $139 billion (272 billion Real, 867 billion RMB, 7.5 trillion Rupee, 4.2 trillion Rubble, 521 billion Saudi Riyal) according to the latest HFR Emerging Markets Hedge Fund Industry Report, published by HFR, the established global leader in the indexation, analysis and research of the global hedge fund industry. Net capital inflows to Emerging Markets hedge funds exceeded $3.0 billion in 4Q12, the highest quarterly inflow since 1Q08.

Hedge fund performance was strong across hedge funds investing in BRIC economies, with the HFRX BRIC Index gaining +13.4 percent for 2012. The strongest contribution to EM hedge fund performance was from India-focused hedge funds, with the volatile HFRX India Index gaining +27.6 percent for the year, topping the gain of the Mumbai Sensex and occurring against a backdrop of moderating core inflation and positioning for accommodative policy responses.

The HFRX Brazil, China and MENA Indices gained +9.5, +9.4 and +8.6 percent, respectively for 2012, with each above their respective regional equity markets. Brazil’s Banco Central signaled that Brazil will continue to defend itself from short-term capital flows, which have occurred as a direct result of developed market quantitative easing, while the Chinese central bank reaffirmed its commitment to prudent and stable growth policies, despite stimulus measures by Bank of Japan.

The HFRX Russia Index gained +6.6 percent for 2012, underperforming the gain of Russian equities, but gained +4.0 in January 2013; the Russian central bank adopted a tighter monetary policy in 2H12 as government moved from exchange rate targeting to inflation targeting.

The HFRX Currency Index posted a modest gain of +3.0 percent for 2012, but advanced over +6.0 percent from July 2012 through January 2013, with gains in 7 of the last 8 months.

EM capital flows for 4Q were dominated by flows into Emerging Asia and hedge funds investing across Multiple EM regions, with these receiving $1.3 and $1.5 billion, respectively, while funds investing in Russia/Eastern Europe saw inflows of over $200 million. The number of hedge funds investing in Emerging Markets also reached a new record to conclude 2012, and now total over 1,100 funds. EM hedge funds are also increasingly focused on Currency and Commodity exposure, with Macro hedge funds increasing to 14.4 percent of EM hedge funds, up from 11.0 percent as of year-end 2011.

“Currency volume and volatility increased sharply in 4Q12 in anticipation of, and in response to, Bank of Japan inflation targeting and stimulus measures, and these have continued as Emerging Market economies prepare for the impact that additional stimulus measures and competitive currency devaluation are likely to have in 2013,” stated Kenneth J. Heinz, President of HFR. “Although Macro hedge funds produced only limited gains in 2012, the environment has improved in recent months. Emerging Markets and Macro hedge funds are likely to experience significant opportunities in early 2013 as EM monetary authorities adjust to developed market stimulus efforts by utilizing inflation targeting and various economic stabilization measures.”

Press release

HFR (Hedge Fund Research, Inc.) www.hedgefundresearch.com

Bg

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   

Banner

Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing


  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Opalesque Roundtable: Where are all the good ESG hedge funds?[more]

    Benedicte Gravrand, Opalesque Geneva: What are the benefits of sustainable investing? Many pension funds look to focus on that angle to reflect their company’s good governance, but face many challenges while doing that. A portfolio manager at Univest, a large Dutch pension fund, discusses this is

  2. Bill Gross gives his first investment outlook for Janus fund[more]

    Bill Gross strikes a gloomy tone in his first note to investors at his new gig at Janus Capital. Bill Gross, the renowned bond fund manger, struck a pessimistic chord in his first note to investors at his new gig at Janus Capital. His notes, usually full of silly commentary and upbeat advice, took a

  3. Investing - Big investors move to shore up Fannie, Freddie trade, Two hedge funds eye $1bn support to Sahara to secure Subrata Roy's release[more]

    Big investors move to shore up Fannie, Freddie trade From Forbes.com: Two of the nation’s most prominent investors who have been leading the charge to make a big score out of the shares of Fannie Mae and Freddie Mac moved on Friday to shore up shares of the mortgage giants that plunged r

  4. Opalesque Exclusive: What's next for trend followers?[more]

    Bailey McCann, Opalesque New York: New research out from Ibbotson touches on a key debate happening among investors and fund managers, specifically whether long term trend followers can survive in the new

  5. Swiss insurance investment manager opens office in insurance traders' Mecca; London[more]

    Benedicte Gravrand, Opalesque Geneva: Twelve Capital, a swiss manager focused on insurance related investments, was authorised by the UK's Financial Conduct Authority (FCA) as a MiFID investment firm on October 1st and opened its new London office. "In an effort to enhance its investment