Emerging market hedge funds had their strongest first quarter in six years, gaining 7.3 per cent in the three months to 31 March, new research shows.
Chicago-based Hedge Fund Research said that capital invested in emerging market hedge funds soared to $127.3 billion over the quarter, an increase of nearly $10 billion since the end of last year.
The previous record for assets under management of $123 billion in such funds was set in the second quarter of 2011.
The capital increase was performance-driven, as net new capital flows remained subdued, HFR said. In fact, emerging market hedge funds had net outflows of $365 million in the opening quarter of the year.
New capital flows were concentrated in emerging Asia and Russia/Eastern Europe, which received $500 million in net new capital combined.
The total number of emerging market hedge funds continued to rise during the first quarter and reached 1,059, up from the previous record of 1,046 in 2007.
“In a similar manner to the broader global economy, EM hedge funds will play a crucial role serving as the growth engine in the expansion of the hedge fund industry by offering sophisticated, transparent investment strategies in emerging economies to a growing audience of global investors,” said Kenneth Heinz, president of HFR.