The sell off in emerging markets has taken its toll on the Brevan Howard Emerging Market Fund. The world’s largest EM focused fund was not having a great year anyway, and the added volatility in June beat what was left of the $2.6 billion fund. In Tommy Wikes’ report for Reuters, the BH Emerging Markets Strategies Master Fund declined 4.8 percent for this month, taking the year to date performance to an abysmal -11.6 percent, as of June 14.
Brevan Howard Emerging Market Accounted for 9.1% NAV
The fund, also called BHEMS, accounts for 9.1 percent NAV of the Brevan Howard Global Opportunities Master Fund Limited. BH Emerging Markets Strategies Master Fund is lead by Geraldine Sundstrom, who managed a good return of +14 percent last year. While Brevan Howard has a habit of weeding out under-performing funds—it just chose to show the door to the portfolio manager of its macro forex fund—the same fate will not meet one of its largest allocations. Apart from Brevan Howard’s EM and Macro FX fund strategy, the firm is doing badly in the commodities sector as well. The $845 million Brevan Howard Commodities Strategies was down 3 percent till the end of May.
Back on Track after QE Fears Abate
The emerging market strategy, which took a downward turn in the later part of May and early June, is likely to ease back as the Fed vows to continue its $85 billion monthly bond purchases. Emerging markets were hit by selloffs on fears of the Fed announcing the taper on QE, which has not materialized yet. While EMs were not exactly caught in a storm of selling, but selling was noticeable. Lipper Hedge Fund data showed that EM funds and ETFs took $2.8 billion in outflows in two weeks ending on June 5. Similarly EM debt funds and related ETFs suffered through $414 million in outflows.
iShares MSCI Emerging Markets ETF (NYSEARCA:EEM) is down 9 percent and iShares JPMorgan USD Emer Mkt Bnd Fd ETF (NYSEARCA:EMB) has declined over 6 percent since May 22. Despite outflows over the short term the EM funds and ETFs have taken large inflows, the EM equities have take $16.3 billion in inflows for the year, whereas debt funds took $6.6 billion.