Fri, Jul 10, 2020
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

HFRI China, Russia indices lead gains as trade, geopolitical uncertainty accelerates

Friday, November 22, 2019
Opalesque Industry Update - Emerging Markets hedge funds extended industry-leading performance through October, with not only Chinese- but also Russia-focused hedge funds driving performance gains, said the HFR Asian Hedge Fund Industry Report and the HFR Emerging Markets Hedge Fund Industry Report from HFR.

Continuing many of the themes which have driven performance gains throughout 2019, Emerging Markets hedge funds continued to position for and trade through trade tariff tensions, the falling Chinese Renminbi, growing protests in Hong Kong, and interest rate cuts by the U.S. Federal Reserve.

EM hedge fund performance was led by the HFRI EM: China Index, which narrowly eclipsed the HFRI EM: Russia/Eastern Europe Index as the leading area of EM hedge fund performance YTD through October.

The HFRI EM: China Index surged +14.7 percent YTD through October, with performance driven by a combination of gains in Chinese equites and the falling Chinese Renminbi, which fell to below 7 to the U.S. Dollar.

Similarly, the HFRI EM: Russia/Eastern Europe Index has jumped +14.2 percent for 2019, though this trails the surge in Russian equites, while the Rouble has gained against the US dollar.

By way of comparison, the HFRI Fund Weighted Composite Index, the leading benchmark of global hedge performance inclusive of all strategies and regions, has gained +7.5 percent YTD through October, while the HFRI Emerging Markets (Total) Index advanced +8.4 percent.

Strong performance of EM hedge funds failed to extend the 2Q 2019 record level of total EM capital, with capital registering a modest decline to end 3Q at $237.3 billion (Chinese Renminbi: 1.67 trillion, Brazilian Real: 999 billion, Indian Rupee: 17.0 trillion, Russian Ruble: 15.1 trillion, Saudi Real: 890 billion).

Other EM regions also continued to navigate the volatile currency and low global interest rate environment, as the HFRI EM: Latin America Index gained +7.9 percent YTD through October, while the HFRI EM: MENA Index trails the overall hedge fund industry despite returning +5.4 percent for the year. Hedge funds in developed Asia have posted gains in line the global hedge funds industry, with the HFRI Japan Index advancing +7.7 percent YTD.

Blockchain and Cryptocurrency exposures continued to exhibit a great deal of volatility; the HFR Blockchain Index has vaulted +47.5 percent YTD through October, although this is inclusive of a sharp decline of -33.7 percent in 3Q19. Risk Premia strategies have posted a wide dispersion of performance in 2019, with the HFR BSRP: Multi-Strategy Index surging +40.8 percent YTD through October, while the HFR BSRP: Commodity Index has declined -14.5 percent over the same time period.

"Emerging Markets hedge funds continue to lead industry-wide gains into year-end as trade and geopolitical risks continue to evolve and create new opportunities for specialized, multi-asset, long/short EM investing," stated Kenneth J. Heinz, President of HFR. "Risks and volatility on the current equity, fixed income, commodity and currency markets are likely to not only persist but accelerate as a result of the contrast between low global interest rates and strong gains across EM equites. Investors are likely to expand allocations to EM hedge funds as a way to access these higher growth markets while hedging and mitigating the complex and dynamic risks."

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. Coronavirus crisis: PE industry mulls more realism and longer holding periods[more]

    Laxman Pai, Opalesque Asia: More realism, longer holding periods and an advantage for investors with a long-term focus - these are the main changes that investment managers in the German private equity market expect as a result of the coronavirus crisis. The PE transaction activity is not exp

  2. Multi-strategy hedge funds post double-digit gains, Tiger Global, Coatue score double-digit fund gains in 2020, Lone Pine soars after losses earlier this year, Can Pershing Square's standout year continue?[more]

    Multi-strategy hedge funds post double-digit gains From FT: Large multi-strategy hedge funds have posted double-digit gains for the first half of the year, reversing losses from March, as markets defied the economic downturn brought on by the coronavirus pandemic. Citadel Advisors

  3. Tech: Pandemic boosts digitalisation across the fund industry, The India-China bust up and what it may mean for tech, Machine learning goes global[more]

    Pandemic boosts digitalisation across the fund industry From International Investment: The pandemic has certainly accelerated change and digitalisation in ways that we never imagined, including the funds industry in Luxembourg. Business Continuity Planning and Disaster Recovery Pl

  4. New Launches: Hedge fund Marshall Wace will bet on ESG stocks with new $1bn fund, Stafford Capital raises initial $532m for ninth timberland fund, Nalanda Cap eyes $800m fund, China's Unity Ventures hits first close on US dollar fund[more]

    Hedge fund Marshall Wace will bet on ESG stocks with new $1bn fund From Forbes: Hedge fund Marshall Wace plans to raise $1 billion for a new fund that will invest in stocks with strong environmental, sustainability and governance (ESG) ratings while betting against stocks with poor rating

  5. PPP: Troubled firm Marto Capital asked for PPP money - and got approved, records show, Fallen hedge fund's head among money managers getting PPP relief, Wall Street investors scored emergency government loans amid pandemic, The asset managers approved for PPP money[more]

    Troubled firm Marto Capital asked for PPP money - and got approved, records show From Institutional Investor: Marto Capital - a former wunderkind founded by an ex-Bridgewater Associates star - got approved for emergency funds from the U.S. government, records showed Monday. Katina Stef