Key Takeaways
- • Emerging markets hedge funds delivered 6.8% year-to-date returns through May 2024, with the Asia ex-Japan subindex leading performance at 5.1%, according to Hedge Fund Research data.
- • Assets under management in emerging markets and Asian hedge funds reached approximately $250 billion, the highest level since Q2 2022, while invested capital in Asian hedge funds climbed to nearly $133 billion.
- • The HFRI EM: India Index advanced 4.3% year-to-date, while the broader HFRI Emerging Markets (Total) Index gained 4.2%, signaling broad-based strength across the sector through May.
- • Regional performance diverged significantly, with Latin America posting minimal gains of 0.2% year-to-date, while the MENA index declined 2.8% amid rising geopolitical risks.
- • Cryptocurrency-focused hedge funds with exposure across emerging market regions including South Korea, Russia, China, and the Middle East surged 34.9% year-to-date, building on exceptional 2023 performance of 67.7%.
Summary
Emerging markets hedge funds accelerated gains through May 2024, with broad-based strength across major regional indices and record capital inflows returning to the sector. The HFRI Emerging Markets: Global Index rose 6.8% year-to-date through May, led by Asia-focused strategies that captured regional momentum. The HFRI EM: Asia ex-Japan Index delivered 5.1% returns, while the HFRI EM: India Index advanced 4.3%, reflecting sustained investor appetite for Asia-Pacific exposure.
Capital deployment rebounded significantly during this period, with assets under management in the emerging markets and Asian hedge fund space reaching approximately $250 billion—the highest level recorded since the second quarter of 2022. Estimated capital invested in Asian hedge funds specifically climbed to nearly $133 billion, also representing the highest watermark since Q2 2022. These figures signal renewed institutional confidence in emerging market strategies following a period of relative capital constraints.
Performance metrics painted a mixed regional picture through early 2024. The HFRI Emerging Markets (Total) Index, covering all emerging market regions, advanced 4.2% year-to-date, while the broader HFRI Fund Weighted Composite Index, which includes funds investing in both emerging and developed markets, rose 5.2%. The HFRI Macro (Total) Index led with 7.0% year-to-date gains. However, Latin America proved an outlier, with the HFRI EM: Latin America Index logging only 0.2% year-to-date, while the HFRI EM: MENA Index declined 2.8% as escalating geopolitical tensions weighed on returns.
Cryptocurrency-focused hedge funds with emerging market exposure demonstrated exceptional momentum, with the HFR Cryptocurrency Index surging 34.9% year-to-date through May. This followed extraordinary 2023 performance of 67.7%, indicating sustained strength in digital asset strategies across South Korea, Russia, China, the Middle East, and Japan despite the sector's inherent volatility.
Capital deployment rebounded significantly during this period, with assets under management in the emerging markets and Asian hedge fund space reaching approximately $250 billion—the highest level recorded since the second quarter of 2022. Estimated capital invested in Asian hedge funds specifically climbed to nearly $133 billion, also representing the highest watermark since Q2 2022. These figures signal renewed institutional confidence in emerging market strategies following a period of relative capital constraints.
Performance metrics painted a mixed regional picture through early 2024. The HFRI Emerging Markets (Total) Index, covering all emerging market regions, advanced 4.2% year-to-date, while the broader HFRI Fund Weighted Composite Index, which includes funds investing in both emerging and developed markets, rose 5.2%. The HFRI Macro (Total) Index led with 7.0% year-to-date gains. However, Latin America proved an outlier, with the HFRI EM: Latin America Index logging only 0.2% year-to-date, while the HFRI EM: MENA Index declined 2.8% as escalating geopolitical tensions weighed on returns.
Cryptocurrency-focused hedge funds with emerging market exposure demonstrated exceptional momentum, with the HFR Cryptocurrency Index surging 34.9% year-to-date through May. This followed extraordinary 2023 performance of 67.7%, indicating sustained strength in digital asset strategies across South Korea, Russia, China, the Middle East, and Japan despite the sector's inherent volatility.
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