Mon, Mar 30, 2015
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

Emerging markets hedge funds navigate turmoil, uncertainty to produce strong gains

Friday, August 29, 2014
Opalesque Industry Update - Hedge funds investing in Emerging Markets posted strong gains through mid - year , increasing total EM hedge fund assets to an eighth consecutive quarterly record, despite a sovereign debt default by Argentina and continuing geopolitical uncertainty in Ukraine, Syria, Israel, Iran and Iraq. Total hedge fund capital invested in Emerging Markets hedge funds increased to over $184 billion (1.13 trillion RMB, 421 billion Brazilian Real, 6.65 trillion Russian Rouble, 690 billion Riyal, 11.1 trillion Indian Rupee), according to the latest HFR Emerging Markets Hedge Fund Industry Report, released today by HFR, the established global leader in the indexation, research and analysis of the global hedge fund industry.

The asset increase of $9 billion of total EM Assets was entirely performance - based, with EM funds experiencing a minor net asset outflow of less than $200 million, while t he total number of EM hedge funds increased to over 1,150, a new record.

The HFRX Russia Index posted a gain of +13.8 percent in 2Q14, recovering the steep loss of - 12.5 percent from 1Q14 and topping the YTD decline of Russian equities by approximately 1,000 basis points. Similarly, the HFRI Russia/Eastern Europe Index, which includes an even wider base of regional hedge fund strategies, gained +7.0 percent in 2Q, nearly recovering the decline of - 8.0 percent from the volatile 1Q. As a result of the strong performance gains, total global hedge fund capital invested Russian and Eastern Europe increased to more than $26 billion, a new record.

Hedge funds investing in Emerging Asia also produced strong gains, with the HFRX India Index up +18.5 percent for the period, extending the YTD gain of the volatile India Index to +26.7 percent. The HFRI China Index gained +0.9 percent in 2Q and +2.90 percent in July, erasing 1Q losses and extending the YTD gain to +1.0 percent. Total global capital invested in hedge funds focusing on Emerging Asia increased to nearly $50 billion, while the number of funds increased to over 520.

Despite an escalation of regional geopolitical turmoil and military activity, the HFRX MENA Index returned +2.3 percent in 2Q, bringing YTD performance, inclusive of a July gain, to +3.1 percent. Approximately 50 hedge funds managing nearly $4.2 billion in vest with a dedicated focus on the Middle East. Similarly, despite the expectations for, and eventual reality of, sovereign default by Argentina, the HFRX Latin America Index gained +5.8 percent in 2Q14; inclusive of a subsequent decline of - 1.0 in July, the LatAm Index has gained +2.8 percent YTD 2014. Over 100 fund s collectively managing over $11 b illion invest with a dedicated focus on Latin America.

“Emerging Markets hedge funds posted a strong recovery from early year losses in the second quarter, providing additional and further evidence of strong EM hedge fund performance available to investors which have the sophistication, risk and volatility tolerance required to monetize these gains,” stated Kenneth J. Heinz, President of HFR. “Despite recent gains for broad market indices in both e merging and developed markets, multiple geopolitical catalysts for market volatility remain salient to global investors, including fluid situations in Syria, Iran, Iraq, Israel, and Ukraine/Russia. EM hedge funds offer global investors the best opportunity to access the most opportunistic, tactical exposure to volatile, dynamic trends across EM equity, currency and fixed income exposures, and these powerful trends are likely to drive continued record assets to EM hedge funds in 2H14.”
PD

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. Other Voices: Does the hedge fund industry benefit society?[more]

    This article was authored by Don Steinbrugge, Chairman of Agecroft Partners, a US-based global consulting and third party marketing firm for hedge funds. It is no secret that the hedge fund industry is viewed negatively by a la

  2. Private credit comes into focus for investors[more]

    Bailey McCann, Opalesque New York: As investors look for a way out of the low yield/no yield environment, private credit is becoming an increasingly attractive asset class, according to a white paper from Bayshore Capital Advisors. Private credit has grown steadily since the financial crisis as

  3. M&A - Hedge funds no longer attractive targets for banks, reinsurers, Blackstone buys stake in Christopher Pucillo’s Solus event-driven hedge fund[more]

    Hedge funds no longer attractive targets for banks, reinsurers From Institutionalinvestor.com: Swiss RE, the world’s second-largest reinsurer, is looking to sell its 15 percent stake in Jersey, Channel Islands–based hedge fund firm Brevan Howard Asset Management. Morgan Stanley reported

  4. Opalesque Radio: Threadneedle expects continuing equity volatility this year[more]

    Benedicte Gravrand, Opalesque Geneva: Investors should expect more volatility, which is signaling a "slow moving" top to the market, KKM Financial’s founder and CEO Jeff Kilburg told CNBC on Monday. And this volatility is going

  5. Hedge funds show strong performance of 2.52% so far in 2015[more]

    Komfie Manalo, Opalesque Asia: The hedge fund industry got off to a strong start in 2015 "completely unmindful" of the poor performance last year, according to data provider Preqin. According to Preqin, following a year which saw the average he

 

banner