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Alternative Market Briefing

Global macro hedge funds crowd into emerging markets

Tuesday, July 19, 2011

amb
Lupin Rahman
From Kirsten Bischoff, Opalesque New York:

Emerging markets investing by global macro hedge funds is "approaching a crowded long" position, according to research by Bank of America Merrill Lynch. With the US debt ceiling debate raging, and European sovereign debt issues rippling through the continent, global macro funds struggling to make gains in 2011 are making it clear that the policy risk of the debt fueled markets of the developed world are not where they want to be. Instead these managers are looking to emerging markets to capture growth.

"We forecast emerging markets to outperform advanced economies over the secular horizon (next three to five years) with growth averaging 6% vs. 2% in advanced economies," says PIMCOs Lupin Rahman in a report released on Monday. Within the emerging markets, Rahman says that specifically growth in Latin America and emerging Asia is expected to outpace other markets with 6% to 7% growth (as opposed to emerging Europe where growth is expected to be in the 4% range).

Global Macro funds have not had an easy time in 2011. Economic trends have taken hold, but often been upended by political and regulatory policy changes. Such challenges have hindered typical macro analysis and BarclayHedge reported global macro funds in their index were down an average of 1.50% for the mon......................

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