The world of emerging market hedge funds has been volatile this year - perhaps unsurprisingly given the extraordinary global events. They recovered sharply in April, having been pounded during March, industry figures show.
Emerging Markets hedge funds continued to navigate a volatile
path through the global coronavirus pandemic, posting steep
losses in March followed by a strong surge in April and a
recovery extending deep into the second quarter of 2020, new
industry figures show.
The HFRI Emerging Markets (Total) Index, compiled by Chicago-based Hedge Fund Research, rose by 5.4 per cent in April, partially recovering from the March slide of 12.4 per cent.
In the year to end-April, the index has fallen by 10.2 per cent year to date after gaining 11.8 per cent in 2019.
“Coronavirus-driven pandemic volatility, which began in early
2020, accelerated and expanded through April to encompass not
only regional Emerging Market equity and fixed income markets,
but also commodity and currency markets, including volatile
cryptocurrency markets,” Kenneth J Heinz, president of HFR,
The data suggests that as far as certain strategies are concerned, the turmoil of 2020 has produced mixed results for the global hedge fund sector, although certain subsectors have performed relatively well, such as macro-strategy funds.
HFR said that total capital invested in emerging market hedge funds fell to $232 billion from the record of $248.3 billion where the category began in 2020.
The HFRI China Index advanced by 4.8 per cent in April, partially recovering from the March decline of 6.45 per cent. This particular index has declined by 3.0 per cent since the start of 2020, topping the decline of 6.2 per cent for Chinese equities. Similarly, but in an even more volatile manner, the HFRI India Index gained 13.8 per cent in April after crashing by 30.7 per cent in March.
The HFRI MENA [Middle East and North Africa] Index advanced by 4.6 per cent in April after falling by 9.7 per cent in March, while the HFRI Russia/Eastern Europe Index gained by 3.5 per cent in April after declining by 15.9 per cent in March. Latin American hedge funds experienced a similar performance path, gaining 4.7 per cent in April after dropping 24.3 per cent in March.
Globally, hedge funds investing in energy and basic materials (HFRI EH: Energy/Basic Materials Index) surged by 14.5 per cent in April after losing by 10.6 per cent in March; the Index has posted a narrow gain of 0.8 per cent year to date through April.
Blockchain and cryptocurrencies also experienced intense volatility in early 2020, with the HFR Cryptocurrency Index surging by 19.5 per cent in April following a decline of 26.2 per cent in March; the Index has gained 13.3 per cent year to date, following a 24.0 per cent return in 2019.