Study: Hedge Funds Reach New Record in EM Investments in Q1

Assets managed by hedge funds betting on emerging markets rose to a record at more than $121 billion in the first quarter of 2011.

(June 6, 2011) — Emerging hedge fund assets have risen to $121 billion in the first quarter of 2011, surpassing the previous record level of $117 billion set in 2007, according to data from Chicago-based Hedge Fund Research.

The industry tracker noted that hedge fund assets in emerging markets have reached the new record level in the first quarter of 2011 as global investors increased exposure to emerging Asia and Russia.

The quarterly asset increase of over 6.5% includes an inflow of nearly $2.3 billion in new capital, concentrated primarily in emerging Asia, as well as $5.1 billion in performance-based gains, with these concentrated in Russia and multi-emerging market regions.

“The record level of assets invested in emerging market hedge funds represents the latest evidence that global investors continue to exhibit a preference for accessing specialized emerging markets exposure via hedge funds,” said Kenneth J. Heinz, President of HFR. “As a direct result of the strategic specialization, sophistication and improved structure of emerging market hedge funds, the number of funds located in Brazil, China, Russia, Singapore and UAE all continue to grow, and we expect this trend to continue in 2011 and in coming years.”

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The continued growth and popularity of emerging markets, namely less developed frontier economies, has been widely reported. In April, Brazil ranked above China as the premier emerging market destination for private equity investors in the next 12 months, according to a study by the Emerging Markets Private Equity Association and London and New York-based Coller Capital. Meanwhile, a March report by State Street Global Advisors’ (SSgA) showed that institutional investors should look toward smaller emerging markets to boost returns.



To contact the <em>aiCIO</em> editor of this story: Paula Vasan at <a href='mailto:pvasan@assetinternational.com'>pvasan@assetinternational.com</a>; 646-308-2742

Goldman May Challenge Senate Report

Goldman Sachs is considering releasing documents about its mortgage bets that show that the Senate subcommittee's analysis, which has prompted an investigation of the securities firm, is inaccurate and incomplete.

(June 6, 2011) — Goldman Sachs may soon release documents to counter a Senate report.

In April, the Senate Permanent Subcommittee on Investigations released a 639-page report on the financial crisis, alleging that Goldman executives misled clients in order to reap profits, and then proceeded to lie to Congress when questioned about its actions. The lengthy report was completed after a two-year probe of the mortgage business that led to financial collapse. It concluded that Goldman mismanaged conflicts of interest, putting its interests above all others.

The Wall Street Journal reported that Goldman Sachs may release documents about its mortgage bets to show that the analysis by the subcommittee was inaccurate and incomplete. Even if the documents aren’t made public, the banking giant could use them to challenge investigations that assert that Goldman misled clients about mortgage-linked securities.

Already, Goldman has released hundreds of millions of pages of information to the Senate Permanent Subcommittee on Investigations and to the Federal Crisis Inquiry Commission. “Goldman is a high-octane, high-profile target,” Dick Beckler, a partner in Bracewell & Giuliani’s white-collar defense practice, told Reuters.

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Last week, Goldman Sachs received a subpoena from the New York District Attorney’s office. Meanwhile, the bank is also being investigated by the Justice Department and the Securities and Exchange Commission.  

The string of inquiries into Goldman Sachs’s behavior comes as the federal government is working with attorneys general around the country to reach a settlement with the biggest banks in the US over accusations of illegal foreclosures and fraudulent mortgage practices.



To contact the <em>aiCIO</em> editor of this story: Paula Vasan at <a href='mailto:pvasan@assetinternational.com'>pvasan@assetinternational.com</a>; 646-308-2742

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