EMERGING MARKET HEDGE FUND ASSETS RISE AS CURRENCIES FALL
Inflows to Middle East, LatAm, Emerging Asia funds increase EM assets to new record;
Concerns of US tapering & slow EM growth pressure Real, Rupee and South African Rand

CHICAGO, (August 23, 2013) - Hedge fund assets invested in Emerging Markets increased to a new record in 2Q13 as Emerging Markets hedge funds extended gains through mid-year and investors positioned for continued EM currency volatility in 2H13. Total hedge fund capital invested in Emerging Markets increased to $154.9 billion (Chinese RMB 948 billion, Russian Ruble 5.1 trillion, Brazil Real 371 billion, Indian Ruppe 9.8 trillion, Saudi Riyal 580 billion), the fourth consecutive quarterly record asset level for EM hedge fund assets, according to the latest HFR Emerging Markets Hedge Fund Industry Report, released today by HFR, the established global leader in indexation, analysis and research for the global hedge fund industry.



More information on the report, including the full press release, can be found on our website here:

https://www.hedgefundresearch.com/index.php?fuse=products-iremrg

HFRU Indices: Mid-August Performance

UCITS compliant Hedge funds posted gains, with the HFRU Hedge Fund Composite Index gaining +0.28% through mid-August.

• HFRU Equity Hedge Index posted a gain of +0.51% through mid-August, with contributions from European and Emerging Asian exposure, partially offset by declines in positioning in Brazil, USA and India.
• HFRU Macro Index posted a gain of +0.27% through mid-August, with contributions from Systematic Commodity strategies; gains were concentrated in Currencies and Metals which were partially offset by declines Global Discretionary managers.
• HFRU Relative Value Arbitrage Index posted a gain of +0.05% through mid-August, with positive contributions from European and Asian Credit strategies and Equity Special Situations partially offset by declines in Global Merger Arbitrage managers and idiosyncratic Emerging Markets Fixed Income exposure.
• HFRU Event Driven Index posted a decline of -0.15% through mid-August, with positive contributions from European and Asian Credit strategies and Equity Special Situations partially offset by declines in Global Merger Arbitrage managers and idiosyncratic Emerging Markets Fixed Income exposure.

Learn more at WWW.HFRU.EU

Comments reflect performance figures as of August 19, 2013.

HFRX Indices Mid-August 2013 performance notes

Global financial markets posted mixed performance through mid-August, as US equities posted the worst weekly decline for 2013 in 2nd week of month. US equity declines were broad based across value, growth and market capitalizations, with sector declines led by Technology, Semiconductors, Healthcare, Real Estate and Telecom, which were only partially offset by gains in Energy & Commodity sensitive sectors. In contrast to the US, European equities generally gained through mid-August, with gains led by Italy, Spain and France only partially offset by declines in the UK. Asian equities were also mixed with gains in China, Hong Kong and Australia offset by declines in India and Singapore. US yields rose with the US 10 year bond yields rising 30 basis points through mid-month; European yields also rose led by UK Gilts, German Bunds, France, Switzerland and the Netherlands, though yields declined in both Italy & Spain. The US dollar fell against the British Pound Sterling, Australian Dollar, Euro & Japanese Yen, although the US Dollar gained against EM currencies including the Brazilian Real, South African Rand and Indian Rupee. Metal & Energy commodities gains were led by Silver, Copper, Platinum and Oil, while Agricultural commodities were mixed with gains in Cotton and Cocoa offset by declines in Hogs, Soybeans and Wheat. Hedge funds posted mixed declines through mid-August with the HFRX Global Hedge Fund Index posting a decline of -0.40% as losses in Equity Hedge offset gains in Relative Value Arbitrage.

HFRX Relative Value Arbitrage Index gained +0.17% through mid-August, with contributions from Convertible, Corporate Fixed Income and Commodity Arbitrage strategies managers offset by weakness in Credit exposure. The HFRX RV: Convertible Arbitrage Index rose +0.44% as high yield credit widened, with gains in high delta US convertibles, volatility positions and effective rate hedging. The HFRX RV Multi-Strategy Index gained +0.09% as gains in Commodity Arbitrage strategies were offset by Credit exposures, while HFRX Fixed Income Credit Index posted a decline of -0.11%.

HFRX Event Driven Index posted a decline of -0.32%through mid-August, with contributions from Merger Arbitrage strategies offset by declines in Distressed and Credit strategies. The HFRX Merger Arbitrage Index gained +0.12%, with contributions from transactions in First M&F/Renasant, Hudson Bay/Saks, Spartan Stores/Nash Finch, MAA/Colonial Properties and Thermo Fisher/Life Technologies. The HFRX Special Situations Index declined -0.34% from exposure to transactions in Industrial and Non-Cyclical sectors and specific contributions from core positioning in Apple, J.C. Penney, American Airlines, US Airways, Dell, Elan, Yahoo and Penn West Petroleum.

HFRX Macro Index posted a decline of -0.70%, with declines from quantitative Systematic CTA and Fixed Income strategies as EM equities declined and EM currencies fell against the US dollar. The HFRX Emerging Markets Index posted a decline of -0.94% with weakness across Emerging Asia, Latin America & Russia. The HFRX Macro: Systematic Diversified Index declined -0.54% with weakness across Equity, Commodity & Fixed Income strategies.

HFRX Equity Hedge Index posted a decline of -0.81% through mid-August as US equities posted the worst week of performance for 2013 in 2nd week of August. The HFRX Fundamental Value Index declined -0.80% with contributions from global equities positioning offset by declines in large cap US and European exposure. The HFRX Fundamental Growth Index declined -0.77% with contributions from exposure to Brazilian equities and global healthcare sectors only partially offset by gains in Emerging Asia equity. The HFRX Market Neutral Index declined -1.01% from losses in small cap fundamental managers and factor-based strategies.

          Comments reference performance as published through August 16, 2013.

The detailed performance history of the HFRX Indices can be found at: www.hfrx.com

HFR launches Chinese website serving Asian clients, investors and hedge fund managers

HFR is pleased to announce the launch of www.HedgeFundResearch.cn, HFR’s Chinese-language website, which includes general information on the Global and Asian hedge fund industry

www.HedgeFundResearch.cn includes info on over 100 HFR indices, including Asian & Emerging Markets indices, as well as global strategy indices

CAPITAL FLOWS TO ASIAN HEDGE FUNDS TOP US, EUROPEAN FUNDS

HFR releases 2Q13 Asian Hedge Fund Industry Report

• Investors allocated over $3 billion of new capital to Asian hedge funds, with new inflows concentrated in Equity Hedge strategies and Japan-focused funds.

• Total capital invested in the Asian hedge fund industry increased to over $98.4 billion (¥9.6 Trillion Japanese Yen, 602 Billion RMB), the highest level since 2007.

• Asian hedge fund performance was again led by the HFRX Japan Index, which gained +6.3 percent in 2Q13, bringing YTD performance through June to +18.7 percent.

• HFRX Asia Equally Weighted Index, which allocates pro-rata across developed, emerging and blended Asian exposures, posted a gain of +1.4 percent for 2Q and +9.9 percent YTD

More information about the Asian report and the full press release are posted on our website

EQUITY HEDGE DRIVES HFRI JULY GAINS ON EARNINGS, M&A

The HFRI Indices flash update for July 2013  has been posted. Highlights include:

HFRI Technology/ Healthcare Index advances over 4 percent in July, best month since 2010; Shareholder activism, Equity special situations lead Event Driven

Hedge funds posted gains across Equity Hedge, Event Driven & Relative Value Arbitrage strategies in July, as most strategies reversed losses from the prior month on strong earnings, acceleration of M&A activity, moderating concerns of a sharp rise in interest rates and receding macro risks. The HFRI Fund Weighted Composite gained +1.4 percent for the month, the highest monthly performance since January, according to data released today by HFR, the established leader in the indexation, analysis, and research of the global hedge fund industry.

The HFRI Equity Hedge Index led strategy performance in July with a gain of +2.5 percent; Equity Hedge gains were broad based across sub-strategies, sparked by strong earnings reports by Starbucks, Facebook and US Financials and led by HFRI Technology/Healthcare, Energy/Basic Materials and Fundamental Value strategies. The HFRI Equity Hedge: Technology/Healthcare Index gained +4.0 percent in July, the best monthly performance since September 2010, while the HFRI EH: Energy/Basic Materials posted a gain of +3.7 percent, the best monthly performance for energy focused funds in 18 months. Fundamental Value strategies added +3.3 percent in July, with contributions from US, European and Asian exposures, as well as from US Consumer, Financial and Energy sectors. With the July performance, Equity Hedge surpassed YTD performance of Event Driven, leading all main strategy indices with a +7.7 percent gain.

Read full press release here

View the HFRI Indices

HFRX Indices July 2013 performance notes

The HFRX Global Hedge Fund Index gained +1.01% and the HFRX Market Directional Index gained +1.87% for the month of July.


HFRX Equity Hedge Index posted a gain of +2.57% in July, with contributions from Fundamental Value, Growth and Market Neutral strategies. The HFRX Fundamental Value Index rose +2.91% with contributions from positioning in large cap US and European Financial, Telecom and Cyclical sectors, the Index leads EH sub-strategies for 2013 with YTD gain of +11.8%. The HFRX Fundamental Growth Index gained +2.32% with contributions from exposure to global equities with concentration in Healthcare, Industrial and Cyclical sectors in developed markets partially offset by exposure to Latin American equity. The HFRX Market Neutral Index gained +0.60% as positive contributions from small cap fundamental managers were partially offset by factor-based strategies.

HFRX Event Driven Index posted a gain of +1.68% for the month, with contributions from Shareholder Activist and Credit strategies. The HFRX Special Situations Index rose +2.08% with contributions from exposure to transactions in the Energy/Basic Materials, Media and Industrial sectors as well as Dell, Air Products, Elan, Yahoo and Health Management Associates; the Index leads all ED strategies for 2013 with YTD gain of +11.78%. The HFRX Merger Arbitrage Index gained by +0.65%, with contributions from transactions in KKR/Gardner Denver, FNB Corp/BCSB Bancorp, First M&F/Renasant, MAA/Colonial Properties, Thermo Fisher/Life Technologies and Publicis/Omnicom; the HFRX Distressed Index posted a gain of +1.47%.

HFRX Macro Index posted a decline of -0.54% in July, with declines from quantitative Systematic CTA and Fixed Income strategies, partially offset by Emerging Markets exposure. The HFRX Macro: Systematic Diversified Index declined -0.83% with weakness across Commodity & Fixed Income strategies, while the HFRX Emerging Markets Index posted a modest decline of -0.04% with contributions from Emerging Asian exposure partially offset by Latin American exposures.

 The HFRX Relative Value Arbitrage Index gained +0.02% for the month, with contributions from Global Convertible and Corporate Fixed Income managers offset by weakness in Commodity Arbitrage strategies. The HFRX RV: Convertible Arbitrage Index gained +1.15% with gains across US and Global convertibles as high yield credit tightened to below 5 percent, while HFRX Fixed Income Credit Index posted a gain of +1.03%. HFRX Multi-Strategy Index declined by -0.48% as gains in Credit strategies were offset by Commodity Arbitrage exposures.


More index performance at www.hfrx.com

HFRU Indices: July 2013 Performance Commentary

Global financial markets posted strong gains in July as equities recovered from the June losses on strong earnings releases led by Starbucks, Facebook, Wells Fargo and other US Financials. Equity markets posted gains across regions, sectors and capitalization, with leadership from small cap, Biotechnology, Healthcare & Financials. European equity gains were led by France, Italy, the Netherlands, Spain and Sweden, while Asian gains were led by Australia and Hong Kong as equity volatility declined. The US yield curve steepened as yields increase across mid-to-longer dated maturities while shorted dated yields declined for the month, high yield credit tightened over 100 basis points. Energy and Metal commodities gained led by Oil, Gold and Platinum, while agricultural commodities declined led by sharp declines in both Corn & Soybeans. The US dollar declined against the Euro but was little changed against both the British Pound and Japanese Yen. UCITS compliant hedge funds posted gains, with the HFRU Hedge Fund Composite Index gaining +0.77% in July.

• HFRU Equity Hedge Index posted a gain of +1.49% in July, with contributions from Healthcare, European, MENA and Technology exposure, partially offset by positioning in Brazil, Turkey and India.
  
• HFRU Event Driven Index posted a gain of +1.03% in July, with contributions from European and Asian Equity Special Situations and Global Merger Arbitrage strategies.
  
• HFRU Macro Index posted a gain of +0.31% in July, with mixed contributions from Systematic Commodity strategies with gains concentrated in Currencies and Metals which were partially offset by exposure to India and Active Trading strategies.
  
• HFRU Relative Value Arbitrage Index gained +0.15% in July, with gains in Real Estate, Global Convertible and Credit strategies, only partially offset by Volatility and Fixed Income: Asset-Backed strategies.

Comments reference performance as posted on August 1, 2013