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Emerging market and Asian hedge funds have led industry gains so far in 2025, as US trade war policy sparks global volatility.
- The HFRI Emerging Markets: China Index surged 6% in the first two months, while the HFRI EM: Asia ex-Japan Index gained 2.8%.
- The HFRI Emerging Markets (Total) Index, which covers all EM regions, advanced 2.3%, beating the HFRI Fund Weighted Composite Index, which gained 0.8%.
“Emerging markets hedge funds have and continue to navigate powerful, accelerating and rapidly evolving volatility dominated by policy shifts regarding tariffs and global trade to begin 2025,” said HFR president Ken Heinz.
“In addition to trade and tariff shifts, managers are also positioning for the impacts of policy shifts in immigration, energy and US government budget reduction efforts.”
Total EM hedge fund assets declined slightly to end 2024 at an estimated $254.9bn, while total estimated capital invested in Asian hedge funds closed the year at an estimated $131.2bn.
Crypto losses in ’25
Hedge funds with high exposure to cryptocurrency across EM regions including South Korea, Russia, China and the Middle East fell sharply to begin 2025 as the volatile HFR Cryptocurrency Index declined -17.6% through the first two months of the year. It rose 59.2% in 2024.
HFR launched an expanded strategy classification system for hedge funds and alternative investment products focused on the cryptocurrency and blockchain space, with the introduction of 11 sub-strategies.