Emerging-market hedge funds take hard hit

A lower appetite for risk among investors has added up to some lousy returns for hedge funds concentrated in emerging markets, according to the latest data from HFR Group LLC in Chicago.
DEC 11, 2008
A lower appetite for risk among investors has added up to some lousy returns for hedge funds concentrated in emerging markets, according to the latest data from HFR Group LLC in Chicago. While hedge funds have suffered in stride with the overall economic meltdown, the emerging-markets subcategory has been particularly brutalized, according to HFR president Kenneth Heinz. “The hedge fund investor’s indication toward risk right now is very negative,” he said. “People are so intolerant of risk that they’ll pay anything to get rid of it.” The HFRI Emerging Markets Index fell by nearly 29% during the four-month period ending Oct. 31. When the performance losses are added to the $5.2 billion worth of investor redemptions over the period, the hedge fund category declined during the period 33%, to $75 billion for the quarter, which is its lowest point in two years, according to HFR. This compares to a drop of 19% of all hedge fund assets over the period, to $1.5 trillion. “This is the opposite of what we were looking at 18 months ago,” Mr. Heinz said. Through the end of 2007, the emerging-markets category posted annualized returns of better than 25%, making it the best performing hedge fund strategy during that time.

Latest News

People moves: RBC taps Raymond James veteran for Texas complex
People moves: RBC taps Raymond James veteran for Texas complex

Meanwhile, DPL Financial Partners adds two annuity executives and Prime Capital Financial hires a Mid-Atlantic retirement plan consultant

Ex-LPL, special needs advisor pleads guilty in fraud case
Ex-LPL, special needs advisor pleads guilty in fraud case

Andrew Komarow pleaded guilty Thursday in federal court in Hartford to defrauding three financial services companies of close to $3.3 million.

Advisor moves: Raymond James lands $700M Truist team in Naples
Advisor moves: Raymond James lands $700M Truist team in Naples

Elsewhere, Cetera picks up a $210 million Connecticut team from MML, while Wells Fargo FiNet adds a San Diego family practice from LPL

Investor accuses Lasater Capital of hiding $100M in fund defaults
Investor accuses Lasater Capital of hiding $100M in fund defaults

Celebrity endorsements, $500M in claimed assets, and a state regulator stepping in.

American Express to make job cuts as AI revolution ramps up
American Express to make job cuts as AI revolution ramps up

“We needed to become a more agile and efficient organization,” said American Express CEO Stephen Squeri.

SPONSORED Built on insurance experience to deliver on long-term promises

Knighthead Life entered the market with a competitive MYGA. A strong launch earned advisor confidence and paved the way for FIAs.

SPONSORED In the Age of AI, Trust Becomes the Advisor's Greatest Asset

As AI makes financial information more accessible than ever, Lana Hock explains why human judgment, trust, and empathy remain the qualities clients value most in a financial advisor