01/06/2010 Author: Tony Griffiths

Emerging market funds avoid Euro woes in Q1

Emerging market hedge funds have navigated their way through much of Europe’s sovereign debt crisis with the tactical use of credit default swaps (CDS) and currency derivatives, helping the sector to 4.7% return year-to-date, according to data provider Hedge Fund Research.

Strong first-quarter performance for 2010 saw EM funds add a further $5.3bn to the sector’s total AuM, which, despite net outflows of $560m, increased to $98bn.  

Net outflows were largely due to investors scaling back their exposure to Asia and Russia/Eastern Europe, where a combined total of just over $1bn was withdrawn in Q1. This was offset by over $500m of inflows at Latin Amercian funds and funds investing in multiple emerging markets.

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