Emerging Markets Hedge Funds Top Performance and New Inflows So Far in 2017

Nine out of 10 hedge fund strategies tracked by Preqin posted positive return in April. with the Preqin All-Strategies Hedge Fund benchmark posting a gain of 0.76% in April, its sixth consecutive month of positive performance. All other leading hedge strategies made gains as well, and the 12-month performance for hedge funds now stands at 10.67%. Preqin also reported that Macro strategies funds suffered their second consecutive month of losses, and are up by 0.87% year-to-date. The top performing strategy so far in 2017 is Activist (up 4.9%) followed by Discretionary (up 4.6%).

On a geographic basis, the top-performing hedge funds (greater than $100 million) were in Emerging Markets, which are up 6.6% year-to-date, according to Preqin. This geographic sector has been propelled by three consecutive quarters of new investments, and a strong first-quarter performance of emerging markets hedge funds that helped push this sector in April to an all-time high of $205.8 million assets under management, according to Hedge Fund Research (HRF), Chicago. The top performer for the first quarter was Emerging Markets Asia, which includes India and China. For the period, India returned 5.63%, which contributed to the strongest performance so far this year of 22.1%.

HFR also reported that emerging markets hedge funds overall were up 7.8% based on their index, with China funds posting a gain of 10.3% year-to-date. HFR reported there are about 516 hedge funds investing in the Emerging Markets Asia region. HFR classifies emerging markets are those in Asia (ex-Japan), Africa, Latin America, the Middle East, Russia and Eastern Europe, and Multiple Emerging Markets.

According to Kenneth Heinz, HFR president, emerging markets hedge funds, including those investing in Latin America, the Middle East, Asia, and Russia, have “led industry performance through geopolitical uncertainty.” This uncertainty covered currencies, commodity prices, US dollar strength, politics, and terrorism. He also predicted that emerging market funds will continue to be the top performers throughout 2017.

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The strategy laggard on a year-to-date basis has been Macro strategies, with a 0.87% return, based on Preqin data.

Tags: EM, Hedge Fund, performance, Preqin

The White House has nominated Brian Quintenz, founder of Saeculum Capital Management, to be a commissioner of the Commodity Futures Trading Commission (CTFC) for a term expiring April 13, 2020.

Quintenz was originally nominated by President Obama last year, but his confirmation was not voted on before Congress ended its session for the year. And earlier this year, President Trump had formally withdrawn Quintenz’s nomination before re-nominating him late last week. He would fill the seat vacated by Scott O’Malia.

“Should I be confirmed, I pledge to ensure the market concerns of the agricultural sector are recognized and to continue developing a firsthand knowledge of the agricultural community,” Quintenz said before the Senate Agriculture Committee when nominated in 2016. “Transparency increases market efficiency and can provide important checks on risky behavior. The Commission’s focus on data and transparency is encouraging, but more progress is needed.”

In his testimony, Quintenz indicated that he was in favor of restrained regulation. He noted that the financial crisis of 2008 “exposed deep flaws in our markets” and deserved a legislative and a regulatory response. However, he added that “regulations meant to address those flaws should not spill over to harm the normal activity of ordinary businesses. When costs are added without targeting risk, poor outcomes ensue. When standardized rules treat low-risk behavior and high-risk behavior equally, risk is encouraged instead of reduced.”

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Quintenz was the founder of Saeculum Capital Management in 2013, and before that he was a consultant with Rose International, and was a senior associate at Hill-Townsend Capital. Quintenz served in the office of US Representative Deborah Pryce from 2001 to 2007, first as a staff assistant, then rising to the level of senior policy advisor. He received a B.S. from Duke University, and an M.B.A. from Georgetown University’s McDonough School of Business.

“Saeculum is an investment firm currently registered with the CFTC as a Commodity Pool Operator. As the sole proprietor of the firm, it is my responsibility to effectively and meticulously manage risk as well as compliance,” Quintenz told the Senate Agriculture Committee. “I am, therefore, very familiar with the CFTC’s investor protection rules, disclosure requirements, and recordkeeping obligations,” he said, adding that “I will work to ensure that regulations and their burdens are tied to the risks being mitigated.”

CFTC has a total of five commissioners, and there are currently three vacancies.

Tags: Brian Quintenz, Commodity Futures Trading Commission, CTFC, Donald Trump, Saeculum Capital Management, White House