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Emerging-markets hedge-fund assets reach record in '16

Bangkok - Emerging-market hedge-fund assets reached a record at the end of last year, thanks to gains in energy prices and a strengthening dollar, according to Hedge Fund Research.

Assets of developing-markets hedge funds rose to $200.7bn as of the end of December, marking the second straight quarterly record after an increase of $9.3bn for the entire year, according to a report from the industry researcher received on Thursday. Global hedge-fund assets increased by $121.6bn in 2016 to $3.02trn, it showed.

“Strong performance gains, specifically focused in Latin America and Russia/Eastern Europe, contributed to this growth, as investors positioned for the impacts of divergent monetary policies in US and Europe on emerging markets,” HFR’s President Kenneth J. Heinz in Chicago said in the statement.

“Specialised hedge funds which have demonstrated the ability to navigate these trends are likely to continue to lead industry gains in 1H17.”

Emerging-market assets have been resilient since the start of the year amid expectations that a stronger US economy will fuel growth in developing nations, bolster corporate profits and support prices for the commodity exports that many of the countries rely on.

The index of developing-nation currencies is near its highest since August, while that of stocks is at its most since 2015 after suffering declines following President Donald Trump’s victory in US presidential election in November.

An index measuring emerging market hedge funds gained 3.2% in January, after rising 7% in 2016. Those focused on Latin America jumped 5.6% last month, extending a 27.2% surge last year.

Total capital poured in Latin American-focused funds climbed to $6.3bn in 2016, managed by more than 100 funds, while that in Russian and Eastern European-focused funds rose by $2.5bn to $29.3bn under more than 170 hedge funds.

The amount of capital under emerging Asia managed by over 500 hedge funds fell by $4.4bn last year to $48.6bn, while that in Middle-East-focused funds gained $500m with nearly 50 funds managing $4.6bn, according to the report.

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