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Number of hedge funds investing in emerging markets hits record high

Date: Friday, August 24, 2012
Author: Anna Fedorova, Investment Europe

The number of hedge funds investing in emerging markets has hit a new record, increasing by 3.5% since second quarter last year. There are now 1,073 of these funds on the market, according to a report published by specialised analyst Hedge Fund Research (HFR).

Fund providers continue to offer new strategies, expanding their fund range with new offerings focused on currency, fixed income and more sophisticated equity hedge strategies.

The number of macro hedge funds is also on the increase, including discretionary and quantitative/systematic CTAs.

The performance shown by emerging market hedge funds has been positive across geographies. The best performing funds this year to July have been those investing in Latin America. HFR’s index for this region showed 3.9% gains. They were closely followed by 2.7% gains by funds investing in Middle East and North Africa, and 2.3% returns for Russia-focused funds.

 Yet despite the growing number of funds on the market and the positive statistics of EM hedge funds, total assets under management have shrunk by 3% since first quarter. They now stand at $123.5bn.

 HFR attributes this decline to the disappointing performance of the aggregate emerging markets index in Q2, which declined by 6.05%. The outlook for the industry, however, remains positive.