Brevan Howard is shutting down its $2.3 billion emerging market fund after losing 15% of its value last year and 1.6% of its value so far this year and fund manager Geraldine Sundstrom will leave the firm, Laurence Fletcher reports for Reuters.

Brevan Howard Emerging market

Brevan Howard: EM funds faced high volatility in 2013

Emerging market funds had a rough year almost across the board, with uncertainty over Fed tapering driving much of the market uncertainty. “Much of this volatility was influenced by news flow in Developed Markets (for example US Federal Reserve and Bank of Japan announcements), making overall position-taking in Emerging Markets assets difficult to time,” the company said in a letter to investors.

With investors seeing the potential for double-digit DM growth, there isn’t much reason to take on the additional risks involved in EM investments. Now that tapering is underway, growing concerns around countries with high current account deficits, along with the continuing worry that China will have a hard landing, is pushing investors away from EM investments. Even when US equities fell earlier this year, most of the outflows found their way to US bonds and European equities.

Brevan Howard refunding Jan/Feb EM management fees

While the difficult investment environment is effecting everyone investing in EM, and Sundstrom certainly wasn’t the only one to get caught by the Fed’s June tapering announcement, Brevan Howard has a high standard, with its $27 billion Master Fund never having had a down year. Co-founder Alan Howard said the firm is “determined to deliver a more satisfactory outcome” this year and is refunding January and February management fees for the EM fund, reports Tommy Stubbington for The Wall Street Journal.

Recent domestic economic data has been worse than expected, which could slow the rate of tapering and buy EM some more time, but it’s hard to imagine how much difference a small delay could have in the long run. Societe Generale analyst Alain Bokobza has already said that he see “no early end to EM asset de-rating,” and that cumulative inflows to EM equities may already be at their lowest point since 2009 with no inflection point in sight. And unless the EM crash starts to threaten the US recovery, it’s hard to imagine the Fed taking that into account when making future decisions on tapering.