Emerging-market hedge funds lead pack

Date: Wednesday, January 17, 2007
Author: Riva Froymovich, InvestmentNews.com

Hedge funds concentrating on emerging markets rose 20.49% and performed better than any other hedge fund strategy in 2006, according to data from New York-based Credit Suisse's Credit Suisse/Tremont Hedge Fund Index.

Overall the index returned 13.86%.

But Bloomberg News pointed out that the returns of emerging market index mutual were even greater in 2006.

For instance, the MSCI Emerging Markets index gained 29.2%.

"Record highs in global markets and mergers and acquisition activity along with a stronger than expected earnings season, a pause in the continual increasing of interest rates by the Federal Reserve, high energy prices and volatility fluctuations were positive contributors to hedge fund performance in 2006," Oliver Schupp, president of the Credit Suisse/Tremont Hedge Fund Index said in a statement.

However, Citigroup's global equity strategist said yesterday that it expects 2007 to provide a different set of high performers, according to published reports.

Citibank's Ajay Kapur predicted that equity markets in the U.S., Europe and Japan would rally 10% to 15% and outperform emerging markets.

He also said that India and China's strength may fade because they are now overvalued and at risk of a correction, reports said.