Interest in Emerging Market Funds is Volatile
The BHA research team comes in every morning with one goal in mind: to collect unbiased data on institutional investors alternative investment strategies. The responses vary significantly, but one factor remains consistent: the data reflects the real-time interests of investors from all categories. For some investors, their interests change as often as the seasons; for others, a proven approach that brings positive results will always be the firm’s mandate.
Since the start of the third quarter, the BHA research team has identified over 106 investors looking for hedge funds focused on emerging markets. This compares with 254 investors that looked for these funds in the second quarter, and 175 in the first quarter. Considering that there are still five weeks left in the quarter, investor interest in hedge funds focused on emerging markets seems on track to remain high.
Some investors in recent quarters took redemptions as emerging market currency volatility and global growth concerns caused them to reach their risk tolerance levels. But for others, there is still confidence in the space and they are closely watching trends in emerging-market stocks, sovereign debt, and commodities.
Many investors are allocating new capital to funds focused on Latin America and the Middle East. A London-base wealth advisor, which has $300 million under management, mentioned to analysts that it is interested in hearing from all funds devoted to emerging markets, including Latin America (and specifically Brazil), the Middle East, and emerging Europe and Asia.
In the second quarter, total inflows to hedge funds were roughly $9.6 billion.1 Despite outflows of $1.5 billion from emerging market funds during the quarter, managers can expect that there are still plenty of investors looking for these funds.
1 FINalternatives, “Emerging Markets Hedge Funds Suffer $1.5B Outflow,” August 20, 2010, http://www.finalternatives.com//node/13597?time=1282686684.