MENA hedge funds lead emerging markets through August

Hedge funds focused on the Middle East and North Africa posted the strongest returns in emerging markets through August, with the HFRI MENA Index up 18.7% year-to-date, HFR reported. The HFRI Emerging Markets (Total) Index advanced 8.2% over the same period. HFR released the figures alongside its Asian and Emerging Markets Hedge Fund Industry reports.

HFR attributed the MENA gains to heightened geopolitical uncertainty around the Iran conflict, volatile oil prices and a sharp rise in global bond yields, which produced trading activity across energy and financial markets. The HFRI Japan Index also rose 8.8% year-to-date through August, as managers traded pockets of volatility in equities and fixed income.

Performance in other emerging markets was mixed. The HFRI EM: China Index increased 2.8% year-to-date, the HFRI EM: Latin America Index rose 2.6%, and the HFRI India Index declined 3.3% over the first eight months of the year. Across the broader hedge fund sector, the HFRI Fund Weighted Composite Index returned 7.85% through August. The top-performing strategy area was the HFRI RV: Yield Alternatives Index, which climbed 17.9% in the same period.

Estimated assets under management in emerging-markets hedge funds reached a record $287.6 billion at the end of the second quarter. Asian hedge fund AUM increased to an estimated $152.1 billion, marking a third consecutive quarterly record, HFR reported. The firm said rising allocations reflected investor demand for strategies that can respond quickly to fast-moving market events.

Kenneth J. Heinz, president of HFR, highlighted the MENA and Japan gains and noted that uncertainty and market volatility were producing trading opportunities for managers. He observed that Asian and emerging-markets strategies had kept exposures adaptable as risks evolved.

HFR’s data cover manager returns and estimated asset flows through the end of August and are drawn from its midyear industry reviews.