Investors are piling into emerging markets, attracted by triple-digit returns - and the trend is hurting US-focused hedge funds, MarketWatch reports, citing a Deutsche Bank study.
Last year, in the midst of resurgent global liquidity, emerging market hedge funds outperformed all comers, and their attractiveness has not diminished. MarketWatch says US-focused founds could see outflows of 8% in 2007, in sharp contrast to a possible 39% jump in flows to China, and inflows of at least 13% to funds in other parts of Asia and Latin America.
“[Investors] will have to sell something to go into those regions,” Deutsche Bank’s John Dyment said in the report. “We’re seeing slightly diminished interest in the U.S.”
Meanwhile, the same Deutsche poll said almost 40% of investors canvassed “thought it was bad idea for hedge fund managers to add private-equity investments to their portfolios,” and only 15% said it was a good idea to mix the two.
But investors have simultaneously become comfortable with longer lock-ups, which are often used to help managers make longer-term, private equity-type investments, the report said.
