Emerging Market Funds Look Hot, but May Soon Cool

Date: Wednesday, April 15, 2009
Author: New York Times

Hedge funds that invest in emerging markets were a bright spot for the industry last month, earning more for their investors than funds using any other strategy.

But that may not mean investors should rush to get in, Dow Jones says.

According to Hedge Fund Research, its emerging markets total index gained 4.63 percent in March, compared with the second-best strategy, quantitative directional, which gained 3.69 percent last month.

However, Dow Jones said that analysts doubt the gains in emerging market funds can be sustained, in part because the market-driven strategy provides little opportunity for managers to take short positions, limiting the potential returns.