Emerging Market Hedge Funds Enjoy April Rally - Data

Tom Burroughes

8 May 2015

Hedge funds posted gains in April as regional equity and currency markets across China, Russia, Brazil and the Middle East posted sharp gains, while volume surged on the Shanghai/Hong Kong Connect program to a daily record, driving Chinese A-shares to a gain of over 18 per cent for the month, figures show.

Chicago, IL-headquartered Hedge Fund Research has reported that its HFRI Fund Weighted Composite Index gained by 0.8 per cent in April, extending 2015 gains, with contributions from exposure to emerging markets and energy.

April performance was led by the HFRI Emerging Markets Index, rising 7.0 per cent - the best monthly return since May 2009, the organization said in a monthly update.

All emerging market regions posted gains, led by Russia and emerging Asia, with the HFRI EM: Russia/Eastern Europe Index advancing 10.8 per cent for the month, benefitting from the strong recovery in the Russian Rouble, as well as regional Russian equity markets.

The HFRI EM: Asia ex-Japan Index climbed 10.5 per cent, also the best performance since May 2009, while the HFRI China Index posted a gain of 13.0 per cent, the highest return since Index inception in 2008. Hedge funds investing in other emerging markets also posted strong gains, as the HFRI EM: Latin America Index gained 5.9 per cent, while the HFRI MENA Index advanced 3.6 per cent.

Hedge fund strategy performance was led by the HFRI Equity Hedge Index, which gained 2.0 per cent for the month. Equity hedge gains were led by exposure to recovering growth equities, with the HFRI Fundamental Growth Index up 4.0 per cent for the month, the best monthly performance since October 2011. Energy and fundamental value strategies also posted gains, with these HFRI Indices advancing 3.9 and 2.0 per cent, respectively.

Fixed income-based relative value arbitrage strategies also posted gains, as US and European yields rose and high yield credit tightened, with the HFRI Relative Value Arbitrage Index advancing 1.4 per cent. RV gains were led by credit multi-strategy, convertible arbitrage and yield alternative sub-strategies, with these gaining 2.4, 2.1 and 1.9 per cent, respectively, in April.

Event-drriven hedge funds also advanced for the month as deal volume accelerated with transaction announcements in Kraft/Heinz and Teva/Mylan, as well as the announcement of a transaction involving GE, Blackstone & Wells Fargo.