Sun, Aug 31, 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   |   
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. Study shows what resonates with investors: 'Unwavering', 'passionate' beats 'committed', 'dedicated' and more surprises[more]

    Komfie Manalo, Opalesque Asia: A new study by Pershing Square, a unit of BNY Mellon company, showed that an effective value proposition strengthens audience connections and fosters growth, yet many advisors have had little objective guidance in formulating such statements until now. In the

  2. Comment – Why you should avoid the hottest hedge fund hands, Swedroe attacks Hussman over risk management, relative value strategy[more]

    Why you should avoid the hottest hedge fund hands FromCNBC/Yahoo.com: Investors who don't have money with Pershing Square Capital Management are likely salivating at the hedge fund's industry-leading 26 percent return from January through July. But investing with Bill Ackman and other to

  3. AIMA makes 'the case for hedge funds'[more]

    Bailey McCann, Opalesque New York: The Alternative Investment Management Association (AIMA), the global hedge fund industry body,

  4. Managed futures' global diversification is important in next phase of economic recovery[more]

    Komfie Manalo, Opalesque Asia: The global diversification provided by managed futures may prove to be extremely valuable as the markets enter the next phase of the economic recovery, said Campbell & Company, a pioneer in absolute return invest

  5. Ex-UBS prop trader's hedge fund Manikay Partners eyes UK launch[more]

    From eFinancialnews.com: Manikay Partners, a $1.7 billion US multi-strategy hedge fund set up in 2008 by a proprietary trader from UBS with backing from Goldman Sachs, is planning to open in the UK. New York-based Manikay's move into Europe comes after Financial News revealed on Monday that Aurelius