Investment in emerging-market-focused hedge funds dropped 5% in the first quarter to $110 billion, according to new data from Hedge Fund Research. The dip in assets was performance-related: the HFRI Emerging Markets (Total) index was down 7% in the quarter, and some narrower regional indexes were down even more. The HFRI Emerging Markets: Asia ex-Japan index, for example, was down 12%. By contrast, HFRs broadest hedge fund index, the HFRI Fund Weighted Composite, was down 3.06% in the three months ended March 31.
Despite performance problems, HFR reported net inflows of almost $600 million into the category in the first quarter, of which about $400 million went into funds targeted to investment in Russia and Eastern Europe.