Emerging Markets (EM) hedge funds extended their year-to-date losses into October, as global and EM regional equities, currencies and hedge funds all posted sharp declines in the worst losses since 2016.
The HFRI Emerging Markets Index fell -3.7% in October, bringing year-to-date return to -10.7%, which puts hedge funds on track for the worst calendar year of performance since declining -14.0% in 2011.
October also marked the eighth monthly decline in the first 10 months of 2018.
The HFRI Fund-Weighted Composite Index, which includes hedge funds globally of all strategies and regional investment focus areas, also posted a sharp decline of -3.15% in October, lowering the year-to-date return to -1.9% through October.
“After navigating the falling emerging markets currency weakness in early 3Q, volatility in EM hedge funds spiked in recent months as regional equity market losses in both emerging and developed markets accelerated,” said Kenneth Heinz, president of HFR.
“As a result of this volatility spike and performance declines, investors withdrew the largest amount of capital since 2009 despite a negatively-correlated gain in Latin American-focused funds, coupled with more moderate declines in the MENA and Russia/Eastern Europe regions.”
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