[ad_1]
Falling US bond yields and the weakening dollar have helped restore the recovery of hedge funds focused on emerging markets, after some managers, including the $ 12 billion in assets, Pharo Management, struggled after ‘a tough start to the year.
According to the Eurekahedge data group, emerging market funds gained 1.9% last month, ahead of a 1.1% gain among broader hedge funds. That leaves them 5.4% this year, still behind average hedge fund gains of nearly 8%.
Emerging market managers have benefited from a recent decline in U.S. Treasury yields, which skyrocketed earlier this year as easing coronavirus blocking restrictions raised expectations of the US Treasury. investors of a strong US economic recovery and rising inflation.
The ten-year Treasury yield rose from 0.9% at the beginning of the year to more than 1.7% at the end of March as prices fell. However, it has since fallen below 1.5%, driven in part by rising US-China tensions.
Investors typically exit emerging markets as U.S. growth increases and Treasury yields become more attractive, but they tend to do so. pour money back in when US bond yields fall. The weakening of the dollar in the last two months has also helped reduce the costs of debt service in emerging markets, as its debt is heavily referred to as the green dollar.
London-based Pharo, led by former Merrill Lynch banker Guillaume Fonkenell and one of the world’s largest emerging markets hedge funds, was hit hard in the first quarter.
Its $ 5.6 billion and $ 5.3 billion Macro funds, which had made money in each of the last five years, fell nearly 9% and 7% respectively at the end of March, according to figures sent to investors. while its trading fund fell by about 11.5 percent. A company familiar with its positioning claimed the firm had been bullish in emerging markets and in some emerging market bonds with more time.
However, it has reduced some of its losses in the last two months, benefiting from more favorable conditions for emerging markets. Its Gaia fund is now down 6.3% this year through the end of May, according to people who had seen the figures. Its macro fund has fallen 4.7%, while its smaller goodwill has lost 7%, according to people.
“The last year has been tough for fund managers” in emerging markets, said Peter Sleep, senior portfolio manager at Seven Investment Management.
Pharo declined to comment on what had driven the performance.
Other funds that have recently gained are London-based Carrhae Capital, which rose 2.7% in its hedge fund and 4.5% in the long-term fund last month, according to figures sent to investors. The hedge fund has gained 2.1% year-on-year, while the Long fund has gained 9.6%.
Ali Akay, Carrhae’s chief investment officer and former partner of hedge fund SAC, said the rise in US bond yields had driven emerging market investors to grow in value stocks, which had benefited some from their positions.
laurence.fletcher@ft.com
[ad_2]
Source link
