Fri, Aug 28, 2015
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

HFRI Emerging Markets index posts 40%, best gain since 1999, assets post only marginal gains on heightened risk concerns

Wednesday, February 17, 2010
Opalesque Industry Update –Hedge funds investing in Emerging Markets reversed sharp 2008 losses with strong gains in 2009, as the HFRI Emerging Markets (Total) Index gained +40.4 percent for the year, according to data released today by Hedge Fund Research, Inc., the leading provider of data and analysis of the hedge fund industry. This rate of return doubled the overall industry gains as represented by the HFRI Fund Weighted Composite Index, and was led by funds investing in Russia, Latin America, and Emerging Asia.

Assets invested in Emerging Markets hedge funds increased by $25 billion during 2009 to over $93 billion, as performance-based gains of $34.3 billion more than offset total investor withdrawals of $8.5 billion. Withdrawals were significant in the first half of the year, but moderated through mid-year and ended 2009 with a small net inflow of nearly $400 million in the fourth quarter.

Despite the strong gains of 2009, Emerging Markets hedge funds remain well below their previous performance peak (or high watermark) and still require a gain of +14.6 percent from year-end level to fully recover from the drawdown of -39.8 percent which began in 4Q07.

Sovereign risk and service provider updates

Emerging Markets funds ended 2009 with 10 consecutive months of positive performance, only to see this streak broken in January 2010 when these funds experienced a loss of -1.24 percent. Tensions surrounding sovereign credit risk began to mount in 4Q09 and continued through January, contributing to volatility in currencies, commodities and emerging market equities.

Continuing the trend of localization, the number of Emerging Markets funds located in China, Russia, India and Australia increased, while the number in the U.S. and U.K. continued to decline.

The top prime brokers for Emerging Markets hedge funds remain Morgan Stanley and UBS, with both Credit Suisse and Citibank increasing market share. Similarly, top administrators are Citco and HSBC, with Northern Trust and International Fund Services increasing market share.

Region-specific performance and fund growth

• Middle East/North Africa: The HFRX MENA Index posted a gain of +28.3 percent for 2009, its best yearly total since the index was created in 2005. This performance took place despite tremendous local equity market volatility and sovereign credit concerns centered in the UAE in the fourth quarter. Over 20 funds maintain a dedicated focus on investing primarily in theMENA region, managing 2.5 percent of total Emerging Markets hedge fund capital.

• Latin America: Led by strong performance in mining and commodity-sensitive funds, the HFRX Latin America Index returned +41.6 percent in 2009. Over 100 funds globally invest with a dedicated focus on Latin America, and account for $12.3 billion of investor capital.

• Russia/Eastern Europe: Historically the most volatile of the Emerging Markets regions, the HFRI Russia/Eastern Europe Index gained +51.4 percent in 2009. Over 160 funds invest with a dedicated focus on Russia/Eastern Europe, and more than 6 percent of all EM funds are now located in Russia.

• Emerging Asia: The HFRX China Index gained +50.4 percent in 2009, and over 470 funds globally currently invest with a dedicated focus on Emerging Asia. Over half of all Emerging Market hedge fund capital is invested in Emerging Asia, and recent regulatory developments in Chinese financial markets are likely to be a catalyst for continued hedge fund industry growth in the region.

“Developments in sovereign bond markets in recent month have reminded investors of the credit risk and volatility inherent in Emerging Markets, and these risks are likely to persist throughout the rest of the year,” said Ken Heinz, president of Hedge Fund Research, Inc. “Despite this volatility, investors are allocating to Emerging Markets hedge funds expecting these economies to play a significant role in the ongoing global recovery.”


HFR announces Industry Summit: Asia 2010
Hedge Fund Research will host the HFR Industry Summit: Asia 2010 in Hong Kong in September of this year. The HFR Industry Summit is the hedge fund industry’s premier private investor engagement, hosted annually in Chicago and London, and this will mark the event’s inaugural appearance in Asia.


Chicago-based Hedge Fund Research (HFR) Group L.L.C., founded in 1993, is a global leader in the provision of hedge fund data, research, indexation and asset management. www.hedgefundresearch.com


Bg

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
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. Investing - Hedge funds suddenly find real money is back in Argentina's debt, Elon Musk buys more SolarCity stock following hedge fund manager short, BlackRock plans to get into rental-home financing[more]

    Hedge funds suddenly find real money is back in Argentina's debt From Bloomberg.com: The real money is back in Argentina. Before the country’s default in July 2014 (its second in 13 years), most long-term investors abandoned its bond market. As they rushed out, Argentina became a favorit

  2. Activist News - Carl Icahn has snapped up a huge stake in Freeport-McMoRan, and the stock is ripping, Meet Europe's best activist investor[more]

    Carl Icahn has snapped up a huge stake in Freeport-McMoRan, and the stock is ripping From Businessinsider.com: Carl Icahn has picked his next target: Freeport-McMoRan. Icahn and a group of other investors have snapped up an 8.46% stake in mining company Freeport-McMoRan, according to a j

  3. North America - Hedge fund manager Ray Dalio’s challenge to the Fed[more]

    From Newyorker.com: For some reason, Janet Yellen, the chair of the Federal Reserve, decided to skip this year’s annual Fed conference in Jackson Hole, where monetary policymakers from the United States and abroad get together with some prominent academics to discuss the big issues of the moment. Th

  4. Performance - Hedge funds set to bank millions by short selling during London share slump, The China market chaos has made this hedge fund its most money in 2 years, Odey hedge fund said to surge 9% betting against China, Hedge funds with long-held bearish views on China rack up profits, Hedge funds in U.S. seen curbing damage from August turbulence, Hedge funds collect on their predictions of a fall, How did managed futures do while the Dow was down 1000[more]

    Hedge funds set to bank millions by short selling during London share slump From TheGuardian.com: Hedge funds are set to bank tens of millions of pounds from the slump in share prices in London, having bet almost £18bn that the FTSE 100 would fall. The funds making the bets include Lansd

  5. Opalesque Exclusive: John C Head IV leaves alternative investment firm Gallery Capital, David Harrison joins as co-CIO[more]

    Benedicte Gravrand, Opalesque Geneva for New Managers: John C Head IV, former president and co-founder of Gallery Capital Management, an alternative inv

 

banner