Opalesque Industry Update – Strong gains in emerging market (EM) hedge funds focused on India, Russia and the Middle East continued to dominate in the third quarter, facing the challenges of macroeconomic pressures inflationary, global supply chain constraints and the emergence of the Omicron coronavirus variant, with performance overtaking regional EM stock markets and once again complemented by volatile cryptocurrencies.

The HFRI Emerging Markets Index (Total) posted a + 5.6% return from the start of 2021 until November, led by the HFRI Emerging Markets Index: India, which climbed by +35, 0% YTD, while the HFRI Emerging Markets: Russia / Eastern Europe index jumped + 22.7%, as reported in the publications of HFR Asian Hedge Fund Industry Report and HFR Emerging Markets Hedge Fund Industry Report, the established global leader in indexing, analysis and research of the global hedge fund industry.

The HFRI 500 Fund Weighted Composite Index, which includes funds from all regions of emerging and developed markets, gained + 8.8% from the start of 2021 through November.

Total emerging market hedge fund assets hit a record $ 275.5 billion at the end of 3Q21, an increase of $ 1.8 billion from the previous quarter and $ 18.9 billion since the end of 2020.

While the performance of EM hedge funds was led by India and Russia, other EM regions showed mixed performance. The HFRI MENA index rose + 15.8% yoy through November, while the HFRI EM: China index posted a narrow gain of + 0.14% yoy. The HFRI EM Index: The Latin America index fell by? €? 8.0 percent YTD through November, as inflationary and supply chain pressures continued to build.

Hedge funds in emerging regions including Korea, Russia, China, and the Middle East (as well as Japan) have become increasingly active in the volatile cryptocurrency trading. Despite recent volatility, the HFR Cryptocurrency Index has jumped + 300% from the start of 2021 through November, driving the overall industry performance gains.

Total capital invested in Asian hedge funds hit a new high of $ 139.4 billion at the end of 3Q21, an increase of almost $ 1.0 billion from the previous quarter and $ 13.5 billion dollars since the end of 2020.

“Strong inflationary pressures and global supply chain constraints became dominant trends late in the year, complicating an uncertain global recovery environment and increasing geopolitical risks in Eastern Europe. Emerging market hedge funds have successfully navigated this complex and fluid environment, with focus on the volatility of emerging currencies (i.e. Turkey), soaring global inflation, expansion rapid pace of cryptocurrency trading and changes in energy trading relationships, including refining and the implications of the Nord Stream 2 pipeline, ”said Kenneth J. Heinz, President of HFR. “Leading global institutions and investors looking to access the powerful trends in EM and Cryptocurrency hedge funds while limiting the volatility associated with these rapidly growing areas, are likely to drive growth and continue expansion until 1S22. “