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Latin America comes out on top for hedge funds

peru_marketLatin America was the most popular emerging market for hedge fund activity as capital invested in vehicles focused on the region saw the largest percentage increase in the first quarter of the year.

The capital levels of hedge funds focused on Latin America rose over 15%, according to data from Hedge Fund Research (HFR). But it wasn’t just Latin America that did well in gathering assets.

Capital invested in all emerging markets reached a new record level in Q1 2011, with total assets rising to over $121bn (€82.6bn). The previous record asset level was of $117bn, set in 2007.

The data provider said that the quarterly asset increase of over 6.5% included an inflow of nearly $2.3bn in new capital as well as $5.1bn in performance-based gains.

In terms of performance, the emerging market hedge funds tracked by HFR posted narrow gains of 0.96% for the first quarter of the year. However, the year-to-date performance of 2.80% showed that the funds successfully navigated the inflation-sensitive declines earlier in the year as well as the social and political unrest in the Middle East.

Hedge funds focused solely on this region however had no escape. The HFRX Mena Index declined 4.34% in 1Q11.

As investor appetite for emerging markets continues, Kenneth Heinz, president of HFR, said: “As a direct result of the strategic specialisation, sophistication and improved structure of emerging market hedge funds, the number of funds located in Brazil, China, Russia, Singapore and UAE all continue to grow, and we expect this trend to continue in 2011 and in coming years.”

The importance of Latin America to the hedge fund world was also highlighted earlier this year when the Hedge Fund Association, the US-based trade body, expanded into the region.

Victor Hugo Rodriguez, CEO of LatAm Alternatives, was appointed director of the Latin American chapter while Marcia Rothschild, head of BNP Paribas Securities Services Brazil, and Otavio Vieira, CIO of Safdié Gestão de Patrimônio were selected to be co-directors of the Brazilian Chapter. Furthermore, Juan Luis Rivera, Partner at Moneda Asset Management was appointed director of the Chilean chapter and Daniel Osorio, CEO of Andean Capital Management took up the post of director of the Colombian chapter.

©2011 funds europe