Emerging-market hedge funds post dismal 2008

Funds tracked lost a cumulative 37% last year, marking their worst year in a data stream dating back to 1990, eclipsing the previous 33% decline in 1998 as the worst on record, the Chicago-based group said in a release Tuesday. The funds posted declines for seven consecutive months through December.

Investors withdrew $6.7 billion from emerging market hedge funds in the fourth quarter, lowering global capital invested through such funds to $67 billion, or about 43% lower than peak levels seen at the end of 2007.

The performance reverses what had an overall winning record that saw emerging market strategies topping the performance charts for six out of the last 11 years.

The fund tracker grouped emerging markets into four general categories encompassing Middle East/Africa, Latin America, Russia, and Emerging Asia.

Asian focused strategies saw average declines of 33.5% last year. That performance was helped by a 3% rise in December, the best among any emerging market strategy. The region also ranked as the sole investment strategy to record a positive performance over three years, rising 13.9%

About 45% of all hedge funds tracked, or 460 funds, invest exclusively or with a heavy focus in emerging Asia, HFR said.