News Digest: Asian and Emerging Markets Hedge Funds Thrive Amid Tariff Volatility
March 27, 2025
News Digest:
Asian and emerging markets hedge funds have delivered strong gains in early 2025, capitalizing on market volatility driven by trade uncertainty, tech stock declines, and cryptocurrency turmoil, according to HFR data.
The HFRI Emerging Markets: China Index surged 6% year-to-date through February, while the HFRI EM: Asia ex-Japan Index climbed 2.8%. These gains outpaced the broader HFRI Fund Weighted Composite Index (FWC), which rose 0.8%. Within the FWC, fixed income-based hedge funds led performance, with the HFRI Relative Value (Total) Index up 1.8%.
Regional hedge funds also posted positive returns, with the HFRI Japan Index gaining 1.0%, the HFRI EM: MENA Index advancing 2.2%, and the HFRI EM: Latin America Index rising 1.3%.
Meanwhile, hedge funds with cryptocurrency exposure, particularly in Korea, Russia, China, and the Middle East, faced steep losses. The HFR Cryptocurrency Index dropped 17.6% in the first two months, following a 59.2% surge in 2024. Despite the volatility, HFR expanded its cryptocurrency strategy classifications with 11 sub-strategies to offer more granular insights.
Total emerging markets hedge fund assets dipped slightly to $254.9 billion at the end of 2024, while Asian hedge fund assets remained stable at $131.2 billion.
Kenneth J Heinz, President of HFR, emphasized that hedge funds are navigating “accelerating and rapidly evolving volatility,” driven by shifting U.S. tariff policies, energy regulations, and government budget reductions. He noted growing institutional interest in specialized strategies for emerging markets and cryptocurrency exposure.
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