Emerging-market hedge funds gain traction

Aug 20, 2008 @ 2:11 pm

By Jeff Benjamin

Emerging-market strategies gained some momentum during the quarter ended June 30, but are still struggling, according to Hedge Fund Research Group LLC of Chicago.

HFR reported today that emerging-market hedge funds took in $995 million during the second quarter, reflecting a 66% increase over the $597 million worth of inflows into the strategy during the first quarter of the year.

But the inflows into the category paled in comparison to the year-ago quarter, when emerging market hedge funds took in $3.7 billion.

If the current pace of asset flows continues through the end of the year, the emerging-markets strategy could experience its worst year for investment flows since 2000, when the category had net outflows.

Total capital invested in emerging-market hedge funds increased slightly during the quarter to just over $111 billion, as the HFRI Emerging Market Index gained 0.37% during the quarter.

There were 1,061 funds investing in emerging markets at the end of the quarter, compared to 1,057 at the end of the first quarter, according to HFR.

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