Emerging markets hedge funds recorded total investments of $151 billion, after garnering over $1.8 billion during the first quarter of 2013.
Emerging Markets
According to the latest data from Hedge Fund Research, the first quarter’s strong inflow follows another stupendous performance in the last quarter of 2012, where over $3 billion got allocated among Emerging Markets funds.
Hedge Fund Research reports that during 2012, HFRX Multi-Emerging Market Index posted a strong 13.14 percent return, with HFRX India Index generating a staggering 27.63 return, followed by HFRX BRIC Index yielding 13.41 percent return.
The HFRX Multi-Emerging Market Index provided 5.9 percent return through April, with Asia hedge funds posting strong performance. Chinese funds generated 8.8 percent return, while Korean funds were up by 10 percent and Asia ex-Japan funds generating 8.1 percent return.
In contrast, global hedge funds have delivered a below par 3.8 per cent return for the first four months of 2013. These returns compare poorly with the MSCI World Index, which has delivered 11.9 per cent return for the period.
According to The Eurekahedge Report, amid divergent trends observed in the global markets, on the whole, hedge funds posted positive returns in April. In particular hedge funds targeted at Asia on average provided 9 percent returns during 2013.
According to Hedge Fund Research, Russian/Eastern European Funds gained 0.8 percent through April, while Latin American funds generated 2.2 percent, with MENA-focused hedge funds topping with 6 percent return.
HFR uses a UCITSIII compliant methodology to construct the HFR Hedge Fund indices.
Commenting on the strong performance of emerging market hedge funds, Kenneth J. Heinz, President of HFR observed that emerging market hedge funds continue to navigate a highly complex macro environment, with both direct and second order effects of the developed market stimulus impacting external capital flows and trade balances. These factors drive EM currencies, commodity demand shifts and inflation targets.
Emerging markets like India attracts strong interest among global investors. Recently U.S. investors have shown great interest in India’s first junk bond for 2013 floated by Rolta India Limited (NSE:ROLTA) (BOM:500366).
Alluding to strong performance in the emerging markets hedge funds, Opalesque Research also reported that emerging manager hedge funds posted their sixth consecutive positive month in April, based on data of 240 funds listed in Opalesque Solutions’ Emanagers database. Since inception in January 2009, the Emanagers Total Index returned 69 percent as against 44 percent posted by the Eurekaedge Hedge Fund Index and 61 percent posted by MSCI World Index.
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