Emerging Markets Tops In 2006

Date: Wednesday, January 10, 2007
Author: Hedge Fund Daily

Hedge funds that focus on emerging markets emerged as the best performers in at least two HF indices. Both Hedge Fund Research and HedgeFund.net reported 2006 returns in emerging market strategy as 25.13% and 21.72%, respectively, miles ahead of the second-place finishers. In the runner-up position at HFR was event driven at 15.42% and at HFN’s HFN Small/Micro Cap Average, at 19.84%. As good as the emerging-market returns are, it pales to 2003, when HFR’s emerging markets strategy ended up 39.36%. Four major indices so far finished within in the predicted 11-13% range, with Eureka Hedge Fund Index leading the pack at 13.61%, followed by HFR at 12.99%, Greenwich Global Hedge Fund Index (12.23%, according to preliminary results), HFN (11.76%) and The Hennessee Hedge Fund Index (11.36%). In comparison, the Dow Jones Industrial Average grew 16.29% and the Standard & Poor’s 500 were up 15.81%, but it was the best year for hedge funds in three, thanks to a healthy fourth quarter. "Hedge funds finished the year on strong footing, rallying during the months of October, November and December to yield QR returns of 5.33%," said Ben Rossman of Database and Indexation Group in an interview with Finfacts. HFR reports that its emerging-markets strategy rose 4.08% in December alone. Macros were losers for HFR, where they ended the year at 8.78%, slightly ahead of fixed income (total) at 8.75%; and for Hennessee, where macros climbed only 4.76% YTD. HedgeFund.net says its worst performer for the year was the HFN CTA/Managed Futures Average at 6.82%.