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Komfie Manalo, Opalesque Asia: Emerging market-focused hedge funds suffered sharp losses at the start of 2014 as the HFRI Emerging Markets (Total) Index declined by 2.5% in January on weakness in Eastern Europe and Latin America. Comparatively, the index gained 7.1% in the final four months of 2013.
According to the latest HFR Emerging Markets Hedge Fund Industry Report, hedge funds investing in Latin America and Eastern Europe fell sharply this year even as the funds saw strong capital inflows from investors.
Total hedge fund capital invested in emerging markets increased by over $9bn in 4Q 2013 to over $170bn with inflows for the quarter of $2.1bn. For the full year 2013, total hedge fund capital invested in emerging market increased by nearly $20bn, on inflows of over $6.4bn.
"Hedge funds investing in Ukraine and Argentina have been exposed to tremendous volatility in recent weeks, contributing to an intra-emerging market performance decoupling, with funds investing in Emerging Asia, the Middle East and elsewhere in Latin America producing mixed performance through the recent EM-centric volatility," stated Kenneth J. Heinz, President of HFR.
"As developed markets continue to extract economic stimulus measures led by the U.S. Federal Reserve, it is plausible to expect continued volatility in EM in 2014; however, this volatility is likely to create opportunities ...................... To view our full article Click here
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