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Emerging markets hedge funds post record gains in Q2

Emerging markets hedge funds have posted industry-leading mid-year results amidst ongoing market volatility.

Total emerging market hedge fund capital reached the record level of $239.3 billion (€216 billion) by the end of the second quarter, according to a report by Chicago-based Hedge Fund Research (HFR).

Strong advances were made across all emerging markets regions despite rising trade tariff tensions, the falling Chinese renminbi, growing unrest in Hong Kong, interest rate cuts by the Fed and other central banks, as well as geopolitical friction in areas such as the Middle East.

Performance was led by Russia and Eastern Europe, according to the analysts. The HFR index for the region surged 15.9% year-to-date in July, topping all global hedge fund strategy indices for the year so far.

Other emerging markets regions also fared well against the backdrop of the volatile currency and fixed income trading environment.

The Latin America index made gains of 14.5% year-to-date through July, while China advanced 13%.

Hedge funds focused on the Middle East and North Africa gained 5.5%.

Exposures to blockchain, cryptocurrency, and currency also contributed to gains across emerging markets hedge funds throughout July, despite a recent pullback, the firm said.

The HFR Blockchain index increased by nearly 65% year-to-date throughout July, despite a drop off of 17.2% in the month.

At a global level in July, the hedge fund industry suffered ongoing outflows with investors withdrawing $8.42 billion, according to a separate report by eVestment.

Overall strong performance boosted overall industry assets under management, however, which stood at $3.303 trillion.

Throughout the month, event driven funds were the only fund type which saw significant inflows, with investors adding $2.88 billion.

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