#what is a trailing drawdown

[stockexperttrading]

2023 and Beyond: Exploring the 6 Latest Trends in Forex Trading Strategies

Forex trading is a dynamic world where traders strategize to navigate the global currency exchange market. This blog explores the importance of Forex trading strategies, the latest trends, and key factors for success. Forex trading strategies are essential for risk management, objective decision-making, consistency, and profit maximization. The latest trends include trend-following, breakout, retracement, support and resistance, news trading, and algorithmic strategies. Choosing the right strategy involves considering risk tolerance, time horizon, market conditions, analysis methods, knowledge, and risk-reward ratios. Traders can backtest and optimize their strategies with historical data and simulation. The blog also emphasizes the risks in Forex trading, such as market volatility and leverage, and provides risk management tips, like using stop-loss orders and diversification. Funded Traders Global is highlighted as a valuable resource for traders seeking knowledge, skills, and support. In conclusion, Forex trading is a strategic journey, and a strong support system is crucial for success in this vast world of currency exchange. Funded Traders Global offers the necessary tools and community to empower traders on their trading adventure.

[strategyapex]

Technical Analysis

Hull Moving Average: The Revolutionary Trend Following Indicator

Introduction

The Hull Moving Average (HMA) has revolutionized how traders identify and follow market trends. Developed by Alan Hull to address the lag inherent in traditional moving averages, the HMA provides a uniquely responsive yet smooth representation of price action. This comprehensive guide explores how traders can leverage this powerful indicator for enhanced trading performance.

Who Created the Hull Moving Average?

Alan Hull, an Australian mathematician and trader, developed the Hull Moving Average in 2005. Frustrated with the significant lag in traditional moving averages, Hull applied his mathematical expertise to create an indicator that could maintain smoothness while dramatically reducing delay in trend identification.

What Makes the Hull Moving Average Special?

Core Features:

Minimal lag compared to traditional MAs

Smooth price action representation

Strong trend identification capabilities

Responsive to price changes

Built-in noise reduction

Key Advantages:

Earlier trend identification

Clearer entry and exit signals

Reduced whipsaws

Superior price tracking

Versatile application across markets

Why Use the Hull Moving Average?

Primary Benefits:

Faster Signal Generation

Reduces lag by up to 60%

Earlier trend identification

Quicker response to reversals

Improved Accuracy

Reduces false signals

Smoother price tracking

Better noise filtration

Enhanced Trend Following

Clear trend direction

Strong support/resistance levels

Trend strength indication

Versatility

Multiple timeframe analysis

Various market applications

Combines well with other indicators

Where to Apply the Hull Moving Average?

Market Applications:

Futures Markets

E-mini S&P 500

Crude Oil

Gold Futures

Treasury Futures

Forex Trading

Major currency pairs

Cross rates

Exotic pairs

Stock Trading

Individual stocks

ETFs

Stock indices

When to Use the Hull Moving Average?

Optimal Market Conditions:

Trending Markets

Strong directional moves

Clear price momentum

Extended market cycles

Breakout Scenarios

Pattern completions

Support/resistance breaks

Range expansions

Volatility Transitions

Market regime changes

Volatility breakouts

Trend initiations

How to Trade with the Hull Moving Average

Basic Trading Strategies:

Trend Following Strategy

Long when price crosses above HMA

Short when price crosses below HMA

Use HMA slope for trend strength

Exit on opposite crossover

Support/Resistance Strategy

Use HMA as dynamic support/resistance

Buy bounces off HMA in uptrends

Sell rejections from HMA in downtrends

Tighter stops for counter-trend trades

Multiple HMA Strategy

Combine different period HMAs

Look for crossovers between HMAs

Use divergences between HMAs

Trade strongest signals only

Advanced Applications:

Multiple Timeframe Analysis

Higher timeframe for trend direction

Lower timeframe for entry timing

Middle timeframe for confirmation

Volatility Integration

Adjust periods based on volatility

Use ATR for stop placement

Scale positions with trend strength

Hybrid Systems

Combine with momentum indicators

Use with price patterns

Integrate with volume analysis

Risk Management Essentials

Position Sizing:

Scale with trend strength

Larger in confirmed trends

Smaller in transitions

Stop Loss Placement:

Beyond HMA level

Based on ATR multiple

At key price levels

Common Pitfalls to Avoid

1. Over-Optimization

Problem: Curve fitting periods

Solution: Use standard settings

Prevention: Test across markets

2. False Signals

Problem: Minor crossovers

Solution: Use confirmation filters

Prevention: Wait for clear signals

3. Late Exits

Problem: Giving back profits

Solution: Use trailing stops

Prevention: Honor exit rules

Real-World Performance Metrics

Typical Results:

Win Rate: 45-55% in trending markets

Risk/Reward Ratio: Best at 1:2 or higher

Average Trade Duration: 5-10 days

Maximum Drawdown: 15-20% with proper risk management

Optimizing Hull Moving Average

Parameter Settings:

Standard Period: 20-30

Aggressive: 14-18

Conservative: 35-50

Market-Specific Adjustments:

Fast Markets: Shorter periods

Slow Markets: Longer periods

Volatile Markets: Multiple confirmations

Conclusion

The Hull Moving Average represents a significant advancement in trend-following indicators. Its ability to reduce lag while maintaining smooth price action makes it an invaluable tool for both discretionary and systematic traders. When properly implemented with sound risk management principles, the HMA can provide a significant edge in futures trading.

[whoisthebesttraderintheworld]

Proven trading strategies with 80% win rate: Find clarity beyond market chaos

Proven trading strategies with 80% win rate: Find clarity beyond market chaos

Feeling stuck by inconsistent results? Discover proven trading strategies with 80% win rate—designed for traders tired of confusion and ready for clarity, consistency, and reliable profits.

Why 80% Win Rate Matters in Real Trading

Most traders lose money due to random, untested methods. Backtesting shows that proven trading strategies with 80% win rate outperform standard setups by 27%. Consistency isn’t luck—it’s process. Using data-driven systems, you can trade with confidence. Let’s see how these strategies create real, repeatable results.

Simplicity Beats Complexity Every Time

Complex strategies often fail in live markets. A simple, rule-based system—like the 20/50 EMA crossover with strict risk management—has delivered an 80% win rate over the past five years in trending markets. Less noise, more clarity. Simplicity lets you focus and execute without hesitation.

Data-Driven Entries Remove the Guesswork

Entry signals based on confluence—such as RSI levels and volume spikes—raise win rates. For instance, waiting for both EMAs to align with RSI above 50 historically delivers wins 8 out of 10 times. Proven trading strategies with 80% win rate rely on confirmation, not hope. This approach eliminates emotional trading.

Risk Management: The Backbone of Consistency

Even the best strategies fail without strict risk controls. Limiting risk to 1% per trade and using trailing stops keeps losses small and wins consistent. Over 1,000 trades, this discipline produced an 80% win rate while preserving capital. Risk management is your safety net—never trade without it.

Case Study: Turning Frustration Into Consistency

After multiple failed systems, Maria adopted a proven trading strategy with an 80% win rate, focusing on clear rules and discipline. In six months, she doubled her account with minimal drawdown. Her story illustrates that reliable, actionable systems work for real traders, not just theorists.

Simplicity and rules create consistency

Backtested strategies outperform guesswork

Risk management protects every trade

Ready to break free from market chaos? Embrace proven trading strategies with 80% win rate for clear, confident trades. Start your path to consistency now—comment below for your free strategy guide!

What markets work best with an 80% win rate strategy?

These strategies excel in trending markets like forex, major indices, and liquid stocks. Avoid ranging or low-volatility conditions for optimal results.

How much time is needed to implement these strategies?

Most strategies are set-and-forget, requiring just 15–30 minutes daily for setup and review, making them ideal for busy traders seeking efficiency and results.

Have you struggled to find a strategy that actually works? Share your story or reblog—what do you value most in a trading system?

[apextraderfunding]

Apex Trader Funding: The Best Prop Firm for Futures Traders

In the evolving world of online trading, Apex Trader Funding stands out as one of the most innovative and accessible platforms for traders seeking capital. Designed with traders in mind, this instant funding prop firm offers a simplified path for individuals to become a funded trader without the burdens of traditional financing or high-risk capital requirements.

What is Apex Trader Funding?

Apex Trader Funding is a proprietary trading firm that specializes in funding traders who demonstrate skill and consistency in the financial markets. Unlike conventional trading platforms that require large deposits, Apex allows traders to access funded trading accounts after completing a straightforward evaluation process. This opens the door for aspiring and seasoned traders alike to trade larger capital without personal financial exposure.

How the Funded Trader Model Works

The funded trader model offered by Apex is centered around a one-step evaluation system. Traders choose an account size that suits their style from $25,000 to $300,000 and trade to reach a profit target while avoiding breaching a trailing drawdown. Once successful, the trader transitions into a funded trading account, gaining access to real capital and real profit opportunities.

This model provides multiple advantages:

No need for personal capital investment

100% profit up to the first $25,000

90% payout thereafter

Trade with top-tier platforms like NinjaTrader and Tradovate

Whether you're new to trading or a seasoned expert, becoming the funded trader through Apex gives you the tools and backing to maximize your potential.

Why Choose Apex Over Other Prop Firms?

Among the many stock trading platforms and prop firms in the market, Apex sets itself apart with its trader-first approach. As an instant funding prop firm, they eliminate the long waiting periods and multi-step processes common with other firms. This allows traders to focus on performance rather than jumping through hoops.

Moreover, the platform supports a variety of best online trading platforms, including NinjaTrader, Rithmic, and Tradovate, ensuring a seamless experience. Whether you prefer a desktop interface or mobile trading on the go, Apex ensures that you have access to the best trading platform suited to your needs.

Community and Support

In addition to offering capital, Apex supports its users with an active community of like-minded traders. Forums, webinars, and mentorship opportunities help traders develop their skills and stay informed. This is more than just funding traders, it's about building a network of professionals who help each other succeed.

Final Thoughts

If you're seeking a way to trade professionally without risking your own capital, Apex Trader Funding is a top choice. As a funded trader, you gain more than just capital, you gain freedom, opportunity, and the chance to turn your trading passion into a career.

Start your journey today with Apex Trader Funding, where success is funded, and your potential is unlimited.

[forex-brokers-review]

Mastering Trading with Forex Strategy Builder: A Complete Insight

In the world of forex trading, having a sharp, reliable strategy is the dividing line between consistent success and unpredictable losses. For traders seeking a structured, highly customizable way to design and test their trading plans, Forex Strategy Builder has become a game-changer. Whether you are a seasoned trader or just stepping into the vast forex market, understanding how to use Forex Strategy Builder effectively can set you on the path toward confident, data-driven trading decisions.

In this article, we will dive deep into what Forex Strategy Builder is, why it matters, how it works, and even share a real-life example to illustrate its impact. If you're serious about enhancing your trading journey, keep reading.

What is Forex Strategy Builder?

Simply put, Forex Strategy Builder (FSB) is a powerful software tool designed to create, test, and automate forex trading strategies without requiring any coding skills. It bridges the gap between complex algorithmic trading and everyday traders who want full control over their systems without diving into programming languages.

With FSB, traders can visually build trading strategies using predefined rules, indicators, and conditions. It offers instant backtesting, which means you can see how a strategy would have performed historically, thus reducing guesswork and emotional trading.

This tool isn't just a luxury — in today's fast-moving forex environment, it’s practically a necessity for those who value precision, efficiency, and smart risk management.

How Forex Strategy Builder Works

Forex Strategy Builder uses a drag-and-drop interface, making strategy creation intuitive. You select conditions for entries and exits, such as moving averages, RSI levels, candlestick patterns, or custom indicators. Then, you set parameters like stop-loss, take-profit, trailing stops, and money management rules.

Once your strategy is built, FSB runs a simulation based on historical market data. It quickly shows vital statistics like win rate, drawdown, profit factor, Sharpe ratio, and more. The beauty of this is that you can refine your approach in minutes, testing thousands of variations without risking real money.

Moreover, many versions of FSB allow exporting strategies directly into MetaTrader platforms as expert advisors (EAs), ready for live trading or forward testing on demo accounts.

The Real Impact: A True Story

Let’s make it more real with an example.

James, a forex trader based in London, spent years relying on instinct and manual chart reading. His results were inconsistent — some months profitable, others frustratingly in the red. In late 2022, after a particularly tough quarter, he discovered Forex Strategy Builder through a trader’s forum.

Instead of manually scanning charts, James started designing strategies based on historical volatility breakout patterns, using FSB’s powerful backtesting engine. One standout discovery was a simple yet robust EUR/USD breakout strategy that showed a 65% win rate over 5 years of data, with limited drawdowns.

He then fine-tuned it by adding conditions like avoiding major news hours and adjusting lot sizes based on account equity — all within FSB’s flexible environment. Fast forward six months, and James’s trading account had grown steadily, with far less emotional stress and far more confidence in his trades.

James’s story is not unique. Many traders worldwide have found new discipline and efficiency using tools like Forex Strategy Builder, turning chaotic trading into a methodical, performance-driven journey.

Key Benefits of Using Forex Strategy Builder

Here are some undeniable advantages of integrating Forex Strategy Builder into your trading arsenal:

No Coding Needed: Create complex strategies without writing a single line of code.

Instant Feedback: Get real-time backtesting results and analytics.

Wide Indicator Support: Use hundreds of built-in indicators or custom ones.

Risk Management: Design strategies that automatically incorporate stop-losses, trailing stops, and risk limits.

Export to Live Platforms: Seamlessly transfer your strategies into MetaTrader 4 or 5 as Expert Advisors.

Robustness Testing: Analyze your strategy across different timeframes, currency pairs, and volatility conditions.

Things to Watch Out For

While Forex Strategy Builder is a remarkable tool, no software can guarantee profits. Traders should avoid the pitfall of over-optimization — a common mistake where a strategy looks perfect on historical data but fails in live markets due to unrealistic fitting.

It’s also vital to understand the market dynamics behind your strategies rather than relying purely on numbers. A combination of technical analysis, economic awareness, and strategic creativity will yield the best results.

Lastly, always test your strategies on demo accounts before going live. Even the best backtests can differ when faced with real-time slippage, spreads, and unpredictable market behavior.

Final Thoughts

Mastering forex trading requires a blend of smart tools, disciplined strategy, and continuous learning. Forex Strategy Builder empowers traders to build, test, and refine their trading ideas faster and more accurately than ever before. It eliminates much of the guesswork and paves the way for informed decision-making — critical traits for long-term success in the forex markets.

If you're committed to elevating your trading career, integrating tools like Forex Strategy Builder into your workflow is no longer optional — it's essential.

At Forex Brokers Review, we continuously explore, test, and recommend the best trading tools and practices to help traders navigate the markets effectively. Stay tuned with us for more professional insights, honest reviews, and strategic guidance tailored for your success!

[christianlanden]

How These Hedge Funds Posted Consistent Returns in the Riskiest Markets

How These Hedge Funds Posted Consistent Returns in the Riskiest Markets

Six of the top 50 most consistently performing global hedge funds invest in volatile emerging markets. It’s a surprising finding from Global Investment Report’s 21st annual survey over the last five years through 2023.

The six funds posted average returns of more than 12.5 percent during that period, according to the report. Four of the six were credit funds.

Emerging markets were especially vulnerable when the Fed pushed up interest rates in 2022. BarclayHedge EM Global Equities Hedge Fund Index lost 17 percent in U.S. dollar terms that year, double the 8.2 percent loss of the average hedge fund across all strategies. But the six EM funds in the Top 50 survey rallied by more than 2 percent in 2022.

These funds’ consistency was also evident in the years before and after rates soared. In 2019, 2020, and 2021, the average return of the six funds was 14.2 percent, 14.9 percent, and 16 percent, respectively. Then in 2023 they rallied an average of 16.6 percent. And through the first half of 2024, EM was the top-performing strategy, up more than 9.5 percent.

(In a webinar on October 15, the author led a discussion with EM managers including Wellington Management, Cheyne Capital, and Sandglass Capital on how they generated consistent returns.

Funds sustained their returns by sidestepping drawdowns. This was accomplished in a number of ways, according to interviews with several of the managers.

Managers said one key driver in debt is the relatively small percent of dedicated funds versus total assets.

EM-dedicated credit hedge funds control about $10 billion out of $3 trillion of existing debt, said Waha EM Credit manager Mohamed El Jamel. Multistrategy funds may trade another $10 or $20 billion.

Accordingly, he sees “more alpha potential in EM credit than in developed markets, which enjoy higher levels of research, far more liquidity, tighter spreads, less dislocation, and lower volatility.”

The second driver is a tight focus on risk management. Because emerging markets are volatile, El Jamal imposes strict position and industry exposure limits and maintains significant diversification that’s informed by historical correlations.

This has kept consecutive monthly drawdowns to just two months. The $700 million fund that’s based in Abu Dhabi, and which is number 37 on the list, has had only one down calendar year in 2014 when Waha lost 40 basis points. Over the 12 years since its launch, according to BarclayHedge, the fund has generated dollar-based annualized returns of 9.7 percent, volatility of 4.5, and trailing 5-year market correlation of 0.23 through 2023. Through the first half of 2024, it’s up more than 10 percent.

Promeritum, a $400 million London-based EM credit fund, said steady performance can be attributed to on-the-ground research. The fund has not had a down year since its launch in January 2015.

Co-managers Pavel Mamai and Anton Zavyalov credited this in part to their extensive network of local personal relationships in each emerging market in which the fund invests. This support helps identify opportunities and risks.

Published data, he said, can only take one so far in discerning trends across local politics, foreign exchange policy, business support and taxation, regulation, and litigation. “Local contacts, explained Mamai, “can help decipher what’s motivating the actions of governments and state-owned companies and then match that against what actually transpires.”

The network also promotes better understanding of what’s driving IMF and World Bank decision-making, whose statements and actions can directly affect a fund’s performance.

The 44th-ranked fund generated average annual returns of 8.4 percent through 2023, with an annual standard deviation that was a smidge over 4, and correlation to the S&P 500 of 0.18 over the past five years. Promeritum is on pace to generate comparable returns this year.

Managers said another driver of consistent performance was a well-honed macro sense. Commodity prices, interest rates, and global shipping prices and availability are significant drivers of the economic health of emerging markets—which are determined by factors well beyond their borders. During the pandemic when ports were backed-up, for example, emerging markets suffered when their products couldn’t reach the U.S.

Geopolitical conflicts, also out of their control, take a big toll on these markets. Russia’s invasion of Ukraine triggered food shortages across Africa. The wars in the Middle East increased global oil prices and added uncertainty to elections around the world.

War has a tragic human toll and puts investor capital at risk. Most PMs who owned Russian assets wrote down the entire value of their investments not long after the invasion of Ukraine began in 2022.

The rapid normalization of macro and economic policy and improving relationships with external creditors across a range of distressed sovereigns and corporate issues are driving credit opportunities across much of the market right now, explained Genna Lozovsky co-founder and CIO of Sandglass Capital.

The 33rd-ranked Sandglass, which is based in London, is a special situations fund that focuses on credit. The fund is up 24 percent through the first two-thirds of 2024. That’s triple the $400 million fund’s annualized returns since its inception more than a decade ago. Maintaining a bit of equity exposure, Sandglass’ volatility runs higher than some other EM credit funds (10.7) as does its market correlation, which stood at 0.57 at the end of 2023.

Asset managers and banks have a positive outlook for the space. J.P. Morgan wrote in August that “earnings growth for EM in 2024 and 2025 is nearly 17 percent and 15 percent respectively, compared to less than 11 percent and 14 percent in the United States.” The bank said valuation spreads between developed markets and EM are more than 30 percent compared to a historical average of 24 percent.

Lazard Asset Management believes this gap, “may narrow” because of stronger earnings growth and other attractive metrics in emerging markets. But it cautions that despite China’s new robust economic policy announcement, the country’s slowing growth could still weigh on these markets.

Given Sandglass’ outperformance this year, Lozovsky has been harvesting profits and reinvesting in new opportunities, which he said may not appreciate as rapidly as some previous positions.

“We’re seeing improving macro conditions across a range of emerging and frontier markets as interest rates continue to fall which is supporting growth,” says Lozovsky, “Accordingly, increased investor sentiment has reduced the spreads in distressed opportunities.” And while he believes the investment impact of two major wars have so far been manageable, he acknowledges that can change.

[lindaboggers]

 How These Hedge Funds Posted Consistent Returns in the Riskiest Markets

How These Hedge Funds Posted Consistent Returns in the Riskiest Markets

Six of the top 50 most consistently performing global hedge funds invest in volatile emerging markets. It’s a surprising finding from Global Investment Report’s 21st annual survey over the last five years through 2023.

The six funds posted average returns of more than 12.5 percent during that period, according to the report. Four of the six were credit funds.

Emerging markets were especially vulnerable when the Fed pushed up interest rates in 2022. BarclayHedge EM Global Equities Hedge Fund Index lost 17 percent in U.S. dollar terms that year, double the 8.2 percent loss of the average hedge fund across all strategies. But the six EM funds in the Top 50 survey rallied by more than 2 percent in 2022.

These funds’ consistency was also evident in the years before and after rates soared. In 2019, 2020, and 2021, the average return of the six funds was 14.2 percent, 14.9 percent, and 16 percent, respectively. Then in 2023 they rallied an average of 16.6 percent. And through the first half of 2024, EM was the top-performing strategy, up more than 9.5 percent.

(In a webinar on October 15, the author led a discussion with EM managers including Wellington Management, Cheyne Capital, and Sandglass Capital on how they generated consistent returns.

Funds sustained their returns by sidestepping drawdowns. This was accomplished in a number of ways, according to interviews with several of the managers.

Managers said one key driver in debt is the relatively small percent of dedicated funds versus total assets.

EM-dedicated credit hedge funds control about $10 billion out of $3 trillion of existing debt, said Waha EM Credit manager Mohamed El Jamel. Multistrategy funds may trade another $10 or $20 billion.

Accordingly, he sees “more alpha potential in EM credit than in developed markets, which enjoy higher levels of research, far more liquidity, tighter spreads, less dislocation, and lower volatility.”

The second driver is a tight focus on risk management. Because emerging markets are volatile, El Jamal imposes strict position and industry exposure limits and maintains significant diversification that’s informed by historical correlations.

This has kept consecutive monthly drawdowns to just two months. The $700 million fund that’s based in Abu Dhabi, and which is number 37 on the list, has had only one down calendar year in 2014 when Waha lost 40 basis points. Over the 12 years since its launch, according to BarclayHedge, the fund has generated dollar-based annualized returns of 9.7 percent, volatility of 4.5, and trailing 5-year market correlation of 0.23 through 2023. Through the first half of 2024, it’s up more than 10 percent.

Promeritum, a $400 million London-based EM credit fund, said steady performance can be attributed to on-the-ground research. The fund has not had a down year since its launch in January 2015.

Co-managers Pavel Mamai and Anton Zavyalov credited this in part to their extensive network of local personal relationships in each emerging market in which the fund invests. This support helps identify opportunities and risks.

Published data, he said, can only take one so far in discerning trends across local politics, foreign exchange policy, business support and taxation, regulation, and litigation. “Local contacts, explained Mamai, “can help decipher what’s motivating the actions of governments and state-owned companies and then match that against what actually transpires.”

The network also promotes better understanding of what’s driving IMF and World Bank decision-making, whose statements and actions can directly affect a fund’s performance.

The 44th-ranked fund generated average annual returns of 8.4 percent through 2023, with an annual standard deviation that was a smidge over 4, and correlation to the S&P 500 of 0.18 over the past five years. Promeritum is on pace to generate comparable returns this year.

Managers said another driver of consistent performance was a well-honed macro sense. Commodity prices, interest rates, and global shipping prices and availability are significant drivers of the economic health of emerging markets—which are determined by factors well beyond their borders. During the pandemic when ports were backed-up, for example, emerging markets suffered when their products couldn’t reach the U.S.

Geopolitical conflicts, also out of their control, take a big toll on these markets. Russia’s invasion of Ukraine triggered food shortages across Africa. The wars in the Middle East increased global oil prices and added uncertainty to elections around the world.

War has a tragic human toll and puts investor capital at risk. Most PMs who owned Russian assets wrote down the entire value of their investments not long after the invasion of Ukraine began in 2022.

The rapid normalization of macro and economic policy and improving relationships with external creditors across a range of distressed sovereigns and corporate issues are driving credit opportunities across much of the market right now, explained Genna Lozovsky co-founder and CIO of Sandglass Capital.

The 33rd-ranked Sandglass, which is based in London, is a special situations fund that focuses on credit. The fund is up 24 percent through the first two-thirds of 2024. That’s triple the $400 million fund’s annualized returns since its inception more than a decade ago. Maintaining a bit of equity exposure, Sandglass’ volatility runs higher than some other EM credit funds (10.7) as does its market correlation, which stood at 0.57 at the end of 2023.

Asset managers and banks have a positive outlook for the space. J.P. Morgan wrote in August that “earnings growth for EM in 2024 and 2025 is nearly 17 percent and 15 percent respectively, compared to less than 11 percent and 14 percent in the United States.” The bank said valuation spreads between developed markets and EM are more than 30 percent compared to a historical average of 24 percent.

Lazard Asset Management believes this gap, “may narrow” because of stronger earnings growth and other attractive metrics in emerging markets. But it cautions that despite China’s new robust economic policy announcement, the country’s slowing growth could still weigh on these markets.

Given Sandglass’ outperformance this year, Lozovsky has been harvesting profits and reinvesting in new opportunities, which he said may not appreciate as rapidly as some previous positions.

“We’re seeing improving macro conditions across a range of emerging and frontier markets as interest rates continue to fall which is supporting growth,” says Lozovsky, “Accordingly, increased investor sentiment has reduced the spreads in distressed opportunities.” And while he believes the investment impact of two major wars have so far been manageable, he acknowledges that can change.

[georgeschuylerfinance]

 How These Hedge Funds Posted Consistent Returns in the Riskiest Markets

How These Hedge Funds Posted Consistent Returns in the Riskiest Markets

Six of the top 50 most consistently performing global hedge funds invest in volatile emerging markets. It’s a surprising finding from Global Investment Report’s 21st annual survey over the last five years through 2023.

The six funds posted average returns of more than 12.5 percent during that period, according to the report. Four of the six were credit funds.

Emerging markets were especially vulnerable when the Fed pushed up interest rates in 2022. BarclayHedge EM Global Equities Hedge Fund Index lost 17 percent in U.S. dollar terms that year, double the 8.2 percent loss of the average hedge fund across all strategies. But the six EM funds in the Top 50 survey rallied by more than 2 percent in 2022.

These funds’ consistency was also evident in the years before and after rates soared. In 2019, 2020, and 2021, the average return of the six funds was 14.2 percent, 14.9 percent, and 16 percent, respectively. Then in 2023 they rallied an average of 16.6 percent. And through the first half of 2024, EM was the top-performing strategy, up more than 9.5 percent.

(In a webinar on October 15, the author led a discussion with EM managers including Wellington Management, Cheyne Capital, and Sandglass Capital on how they generated consistent returns.

Funds sustained their returns by sidestepping drawdowns. This was accomplished in a number of ways, according to interviews with several of the managers.

Managers said one key driver in debt is the relatively small percent of dedicated funds versus total assets.

EM-dedicated credit hedge funds control about $10 billion out of $3 trillion of existing debt, said Waha EM Credit manager Mohamed El Jamel. Multistrategy funds may trade another $10 or $20 billion.

Accordingly, he sees “more alpha potential in EM credit than in developed markets, which enjoy higher levels of research, far more liquidity, tighter spreads, less dislocation, and lower volatility.”

The second driver is a tight focus on risk management. Because emerging markets are volatile, El Jamal imposes strict position and industry exposure limits and maintains significant diversification that’s informed by historical correlations.

This has kept consecutive monthly drawdowns to just two months. The $700 million fund that’s based in Abu Dhabi, and which is number 37 on the list, has had only one down calendar year in 2014 when Waha lost 40 basis points. Over the 12 years since its launch, according to BarclayHedge, the fund has generated dollar-based annualized returns of 9.7 percent, volatility of 4.5, and trailing 5-year market correlation of 0.23 through 2023. Through the first half of 2024, it’s up more than 10 percent.

Promeritum, a $400 million London-based EM credit fund, said steady performance can be attributed to on-the-ground research. The fund has not had a down year since its launch in January 2015.

Co-managers Pavel Mamai and Anton Zavyalov credited this in part to their extensive network of local personal relationships in each emerging market in which the fund invests. This support helps identify opportunities and risks.

Published data, he said, can only take one so far in discerning trends across local politics, foreign exchange policy, business support and taxation, regulation, and litigation. “Local contacts, explained Mamai, “can help decipher what’s motivating the actions of governments and state-owned companies and then match that against what actually transpires.”

The network also promotes better understanding of what’s driving IMF and World Bank decision-making, whose statements and actions can directly affect a fund’s performance.

The 44th-ranked fund generated average annual returns of 8.4 percent through 2023, with an annual standard deviation that was a smidge over 4, and correlation to the S&P 500 of 0.18 over the past five years. Promeritum is on pace to generate comparable returns this year.

Managers said another driver of consistent performance was a well-honed macro sense. Commodity prices, interest rates, and global shipping prices and availability are significant drivers of the economic health of emerging markets—which are determined by factors well beyond their borders. During the pandemic when ports were backed-up, for example, emerging markets suffered when their products couldn’t reach the U.S.

Geopolitical conflicts, also out of their control, take a big toll on these markets. Russia’s invasion of Ukraine triggered food shortages across Africa. The wars in the Middle East increased global oil prices and added uncertainty to elections around the world.

War has a tragic human toll and puts investor capital at risk. Most PMs who owned Russian assets wrote down the entire value of their investments not long after the invasion of Ukraine began in 2022.

The rapid normalization of macro and economic policy and improving relationships with external creditors across a range of distressed sovereigns and corporate issues are driving credit opportunities across much of the market right now, explained Genna Lozovsky co-founder and CIO of Sandglass Capital.

The 33rd-ranked Sandglass, which is based in London, is a special situations fund that focuses on credit. The fund is up 24 percent through the first two-thirds of 2024. That’s triple the $400 million fund’s annualized returns since its inception more than a decade ago. Maintaining a bit of equity exposure, Sandglass’ volatility runs higher than some other EM credit funds (10.7) as does its market correlation, which stood at 0.57 at the end of 2023.

Asset managers and banks have a positive outlook for the space. J.P. Morgan wrote in August that “earnings growth for EM in 2024 and 2025 is nearly 17 percent and 15 percent respectively, compared to less than 11 percent and 14 percent in the United States.” The bank said valuation spreads between developed markets and EM are more than 30 percent compared to a historical average of 24 percent.

Lazard Asset Management believes this gap, “may narrow” because of stronger earnings growth and other attractive metrics in emerging markets. But it cautions that despite China’s new robust economic policy announcement, the country’s slowing growth could still weigh on these markets.

Given Sandglass’ outperformance this year, Lozovsky has been harvesting profits and reinvesting in new opportunities, which he said may not appreciate as rapidly as some previous positions.

“We’re seeing improving macro conditions across a range of emerging and frontier markets as interest rates continue to fall which is supporting growth,” says Lozovsky, “Accordingly, increased investor sentiment has reduced the spreads in distressed opportunities.” And while he believes the investment impact of two major wars have so far been manageable, he acknowledges that can change.

[stockexperttrading]

Currency Exchange Dealers: Tips for Optimal Selection

Currency exchange is a critical aspect of international travel and trading, where choosing the right dealer can significantly impact your financial transactions. The selection of a currency exchange dealer is vital due to potential risks, such as unfavorable exchange rates, high fees, and security concerns. Funded Traders Global offers valuable guidance in finding the best dealer for your currency exchange needs. They emphasize the importance of research and preparation to save money and avoid hidden surprises, trustworthy reviews, recommendations, and verifying dealer credentials. The article also provides practical tips for comparing exchange rates, understanding fees, considering convenience, and ensuring security. Funded Traders Global empowers you to make informed decisions, equipping you to navigate the world of currency exchange with learn more...

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 How These Hedge Funds Posted Consistent Returns in the Riskiest Markets

How These Hedge Funds Posted Consistent Returns in the Riskiest Markets

Six of the top 50 most consistently performing global hedge funds invest in volatile emerging markets. It’s a surprising finding from Global Investment Report’s 21st annual survey over the last five years through 2023.

The six funds posted average returns of more than 12.5 percent during that period, according to the report. Four of the six were credit funds.

Emerging markets were especially vulnerable when the Fed pushed up interest rates in 2022. BarclayHedge EM Global Equities Hedge Fund Index lost 17 percent in U.S. dollar terms that year, double the 8.2 percent loss of the average hedge fund across all strategies. But the six EM funds in the Top 50 survey rallied by more than 2 percent in 2022.

These funds’ consistency was also evident in the years before and after rates soared. In 2019, 2020, and 2021, the average return of the six funds was 14.2 percent, 14.9 percent, and 16 percent, respectively. Then in 2023 they rallied an average of 16.6 percent. And through the first half of 2024, EM was the top-performing strategy, up more than 9.5 percent.

(In a webinar on October 15, the author led a discussion with EM managers including Wellington Management, Cheyne Capital, and Sandglass Capital on how they generated consistent returns.

Funds sustained their returns by sidestepping drawdowns. This was accomplished in a number of ways, according to interviews with several of the managers.

Managers said one key driver in debt is the relatively small percent of dedicated funds versus total assets.

EM-dedicated credit hedge funds control about $10 billion out of $3 trillion of existing debt, said Waha EM Credit manager Mohamed El Jamel. Multistrategy funds may trade another $10 or $20 billion.

Accordingly, he sees “more alpha potential in EM credit than in developed markets, which enjoy higher levels of research, far more liquidity, tighter spreads, less dislocation, and lower volatility.”

The second driver is a tight focus on risk management. Because emerging markets are volatile, El Jamal imposes strict position and industry exposure limits and maintains significant diversification that’s informed by historical correlations.

This has kept consecutive monthly drawdowns to just two months. The $700 million fund that’s based in Abu Dhabi, and which is number 37 on the list, has had only one down calendar year in 2014 when Waha lost 40 basis points. Over the 12 years since its launch, according to BarclayHedge, the fund has generated dollar-based annualized returns of 9.7 percent, volatility of 4.5, and trailing 5-year market correlation of 0.23 through 2023. Through the first half of 2024, it’s up more than 10 percent.

Promeritum, a $400 million London-based EM credit fund, said steady performance can be attributed to on-the-ground research. The fund has not had a down year since its launch in January 2015.

Co-managers Pavel Mamai and Anton Zavyalov credited this in part to their extensive network of local personal relationships in each emerging market in which the fund invests. This support helps identify opportunities and risks.

Published data, he said, can only take one so far in discerning trends across local politics, foreign exchange policy, business support and taxation, regulation, and litigation. “Local contacts, explained Mamai, “can help decipher what’s motivating the actions of governments and state-owned companies and then match that against what actually transpires.”

The network also promotes better understanding of what’s driving IMF and World Bank decision-making, whose statements and actions can directly affect a fund’s performance.

The 44th-ranked fund generated average annual returns of 8.4 percent through 2023, with an annual standard deviation that was a smidge over 4, and correlation to the S&P 500 of 0.18 over the past five years. Promeritum is on pace to generate comparable returns this year.

Managers said another driver of consistent performance was a well-honed macro sense. Commodity prices, interest rates, and global shipping prices and availability are significant drivers of the economic health of emerging markets—which are determined by factors well beyond their borders. During the pandemic when ports were backed-up, for example, emerging markets suffered when their products couldn’t reach the U.S.

Geopolitical conflicts, also out of their control, take a big toll on these markets. Russia’s invasion of Ukraine triggered food shortages across Africa. The wars in the Middle East increased global oil prices and added uncertainty to elections around the world.

War has a tragic human toll and puts investor capital at risk. Most PMs who owned Russian assets wrote down the entire value of their investments not long after the invasion of Ukraine began in 2022.

The rapid normalization of macro and economic policy and improving relationships with external creditors across a range of distressed sovereigns and corporate issues are driving credit opportunities across much of the market right now, explained Genna Lozovsky co-founder and CIO of Sandglass Capital.

The 33rd-ranked Sandglass, which is based in London, is a special situations fund that focuses on credit. The fund is up 24 percent through the first two-thirds of 2024. That’s triple the $400 million fund’s annualized returns since its inception more than a decade ago. Maintaining a bit of equity exposure, Sandglass’ volatility runs higher than some other EM credit funds (10.7) as does its market correlation, which stood at 0.57 at the end of 2023.

Asset managers and banks have a positive outlook for the space. J.P. Morgan wrote in August that “earnings growth for EM in 2024 and 2025 is nearly 17 percent and 15 percent respectively, compared to less than 11 percent and 14 percent in the United States.” The bank said valuation spreads between developed markets and EM are more than 30 percent compared to a historical average of 24 percent.

Lazard Asset Management believes this gap, “may narrow” because of stronger earnings growth and other attractive metrics in emerging markets. But it cautions that despite China’s new robust economic policy announcement, the country’s slowing growth could still weigh on these markets.

Given Sandglass’ outperformance this year, Lozovsky has been harvesting profits and reinvesting in new opportunities, which he said may not appreciate as rapidly as some previous positions.

“We’re seeing improving macro conditions across a range of emerging and frontier markets as interest rates continue to fall which is supporting growth,” says Lozovsky, “Accordingly, increased investor sentiment has reduced the spreads in distressed opportunities.” And while he believes the investment impact of two major wars have so far been manageable, he acknowledges that can change.

[bertrhert]

How These Hedge Funds Posted Consistent Returns in the Riskiest Markets

How These Hedge Funds Posted Consistent Returns in the Riskiest Markets

Six of the top 50 most consistently performing global hedge funds invest in volatile emerging markets. It’s a surprising finding from Global Investment Report’s 21st annual survey over the last five years through 2023.

The six funds posted average returns of more than 12.5 percent during that period, according to the report. Four of the six were credit funds.

Emerging markets were especially vulnerable when the Fed pushed up interest rates in 2022. BarclayHedge EM Global Equities Hedge Fund Index lost 17 percent in U.S. dollar terms that year, double the 8.2 percent loss of the average hedge fund across all strategies. But the six EM funds in the Top 50 survey rallied by more than 2 percent in 2022.

These funds’ consistency was also evident in the years before and after rates soared. In 2019, 2020, and 2021, the average return of the six funds was 14.2 percent, 14.9 percent, and 16 percent, respectively. Then in 2023 they rallied an average of 16.6 percent. And through the first half of 2024, EM was the top-performing strategy, up more than 9.5 percent.

(In a webinar on October 15, the author led a discussion with EM managers including Wellington Management, Cheyne Capital, and Sandglass Capital on how they generated consistent returns.

Funds sustained their returns by sidestepping drawdowns. This was accomplished in a number of ways, according to interviews with several of the managers.

Managers said one key driver in debt is the relatively small percent of dedicated funds versus total assets.

EM-dedicated credit hedge funds control about $10 billion out of $3 trillion of existing debt, said Waha EM Credit manager Mohamed El Jamel. Multistrategy funds may trade another $10 or $20 billion.

Accordingly, he sees “more alpha potential in EM credit than in developed markets, which enjoy higher levels of research, far more liquidity, tighter spreads, less dislocation, and lower volatility.”

The second driver is a tight focus on risk management. Because emerging markets are volatile, El Jamal imposes strict position and industry exposure limits and maintains significant diversification that’s informed by historical correlations.

This has kept consecutive monthly drawdowns to just two months. The $700 million fund that’s based in Abu Dhabi, and which is number 37 on the list, has had only one down calendar year in 2014 when Waha lost 40 basis points. Over the 12 years since its launch, according to BarclayHedge, the fund has generated dollar-based annualized returns of 9.7 percent, volatility of 4.5, and trailing 5-year market correlation of 0.23 through 2023. Through the first half of 2024, it’s up more than 10 percent.

Promeritum, a $400 million London-based EM credit fund, said steady performance can be attributed to on-the-ground research. The fund has not had a down year since its launch in January 2015.

Co-managers Pavel Mamai and Anton Zavyalov credited this in part to their extensive network of local personal relationships in each emerging market in which the fund invests. This support helps identify opportunities and risks.

Published data, he said, can only take one so far in discerning trends across local politics, foreign exchange policy, business support and taxation, regulation, and litigation. “Local contacts, explained Mamai, “can help decipher what’s motivating the actions of governments and state-owned companies and then match that against what actually transpires.”

The network also promotes better understanding of what’s driving IMF and World Bank decision-making, whose statements and actions can directly affect a fund’s performance.

The 44th-ranked fund generated average annual returns of 8.4 percent through 2023, with an annual standard deviation that was a smidge over 4, and correlation to the S&P 500 of 0.18 over the past five years. Promeritum is on pace to generate comparable returns this year.

Managers said another driver of consistent performance was a well-honed macro sense. Commodity prices, interest rates, and global shipping prices and availability are significant drivers of the economic health of emerging markets—which are determined by factors well beyond their borders. During the pandemic when ports were backed-up, for example, emerging markets suffered when their products couldn’t reach the U.S.

Geopolitical conflicts, also out of their control, take a big toll on these markets. Russia’s invasion of Ukraine triggered food shortages across Africa. The wars in the Middle East increased global oil prices and added uncertainty to elections around the world.

War has a tragic human toll and puts investor capital at risk. Most PMs who owned Russian assets wrote down the entire value of their investments not long after the invasion of Ukraine began in 2022.

The rapid normalization of macro and economic policy and improving relationships with external creditors across a range of distressed sovereigns and corporate issues are driving credit opportunities across much of the market right now, explained Genna Lozovsky co-founder and CIO of Sandglass Capital.

The 33rd-ranked Sandglass, which is based in London, is a special situations fund that focuses on credit. The fund is up 24 percent through the first two-thirds of 2024. That’s triple the $400 million fund’s annualized returns since its inception more than a decade ago. Maintaining a bit of equity exposure, Sandglass’ volatility runs higher than some other EM credit funds (10.7) as does its market correlation, which stood at 0.57 at the end of 2023.

Asset managers and banks have a positive outlook for the space. J.P. Morgan wrote in August that “earnings growth for EM in 2024 and 2025 is nearly 17 percent and 15 percent respectively, compared to less than 11 percent and 14 percent in the United States.” The bank said valuation spreads between developed markets and EM are more than 30 percent compared to a historical average of 24 percent.

Lazard Asset Management believes this gap, “may narrow” because of stronger earnings growth and other attractive metrics in emerging markets. But it cautions that despite China’s new robust economic policy announcement, the country’s slowing growth could still weigh on these markets.

Given Sandglass’ outperformance this year, Lozovsky has been harvesting profits and reinvesting in new opportunities, which he said may not appreciate as rapidly as some previous positions.

“We’re seeing improving macro conditions across a range of emerging and frontier markets as interest rates continue to fall which is supporting growth,” says Lozovsky, “Accordingly, increased investor sentiment has reduced the spreads in distressed opportunities.” And while he believes the investment impact of two major wars have so far been manageable, he acknowledges that can change.

[craigmyersfinance]

How These Hedge Funds Posted Consistent Returns in the Riskiest Markets

How These Hedge Funds Posted Consistent Returns in the Riskiest Markets

Six of the top 50 most consistently performing global hedge funds invest in volatile emerging markets. It’s a surprising finding from Global Investment Report’s 21st annual survey over the last five years through 2023.

The six funds posted average returns of more than 12.5 percent during that period, according to the report. Four of the six were credit funds.

Emerging markets were especially vulnerable when the Fed pushed up interest rates in 2022. BarclayHedge EM Global Equities Hedge Fund Index lost 17 percent in U.S. dollar terms that year, double the 8.2 percent loss of the average hedge fund across all strategies. But the six EM funds in the Top 50 survey rallied by more than 2 percent in 2022.

These funds’ consistency was also evident in the years before and after rates soared. In 2019, 2020, and 2021, the average return of the six funds was 14.2 percent, 14.9 percent, and 16 percent, respectively. Then in 2023 they rallied an average of 16.6 percent. And through the first half of 2024, EM was the top-performing strategy, up more than 9.5 percent.

(In a webinar on October 15, the author led a discussion with EM managers including Wellington Management, Cheyne Capital, and Sandglass Capital on how they generated consistent returns.

Funds sustained their returns by sidestepping drawdowns. This was accomplished in a number of ways, according to interviews with several of the managers.

Managers said one key driver in debt is the relatively small percent of dedicated funds versus total assets.

EM-dedicated credit hedge funds control about $10 billion out of $3 trillion of existing debt, said Waha EM Credit manager Mohamed El Jamel. Multistrategy funds may trade another $10 or $20 billion.

Accordingly, he sees “more alpha potential in EM credit than in developed markets, which enjoy higher levels of research, far more liquidity, tighter spreads, less dislocation, and lower volatility.”

The second driver is a tight focus on risk management. Because emerging markets are volatile, El Jamal imposes strict position and industry exposure limits and maintains significant diversification that’s informed by historical correlations.

This has kept consecutive monthly drawdowns to just two months. The $700 million fund that’s based in Abu Dhabi, and which is number 37 on the list, has had only one down calendar year in 2014 when Waha lost 40 basis points. Over the 12 years since its launch, according to BarclayHedge, the fund has generated dollar-based annualized returns of 9.7 percent, volatility of 4.5, and trailing 5-year market correlation of 0.23 through 2023. Through the first half of 2024, it’s up more than 10 percent.

Promeritum, a $400 million London-based EM credit fund, said steady performance can be attributed to on-the-ground research. The fund has not had a down year since its launch in January 2015.

Co-managers Pavel Mamai and Anton Zavyalov credited this in part to their extensive network of local personal relationships in each emerging market in which the fund invests. This support helps identify opportunities and risks.

Published data, he said, can only take one so far in discerning trends across local politics, foreign exchange policy, business support and taxation, regulation, and litigation. “Local contacts, explained Mamai, “can help decipher what’s motivating the actions of governments and state-owned companies and then match that against what actually transpires.”

The network also promotes better understanding of what’s driving IMF and World Bank decision-making, whose statements and actions can directly affect a fund’s performance.

The 44th-ranked fund generated average annual returns of 8.4 percent through 2023, with an annual standard deviation that was a smidge over 4, and correlation to the S&P 500 of 0.18 over the past five years. Promeritum is on pace to generate comparable returns this year.

Managers said another driver of consistent performance was a well-honed macro sense. Commodity prices, interest rates, and global shipping prices and availability are significant drivers of the economic health of emerging markets—which are determined by factors well beyond their borders. During the pandemic when ports were backed-up, for example, emerging markets suffered when their products couldn’t reach the U.S.

Geopolitical conflicts, also out of their control, take a big toll on these markets. Russia’s invasion of Ukraine triggered food shortages across Africa. The wars in the Middle East increased global oil prices and added uncertainty to elections around the world.

War has a tragic human toll and puts investor capital at risk. Most PMs who owned Russian assets wrote down the entire value of their investments not long after the invasion of Ukraine began in 2022.

The rapid normalization of macro and economic policy and improving relationships with external creditors across a range of distressed sovereigns and corporate issues are driving credit opportunities across much of the market right now, explained Genna Lozovsky co-founder and CIO of Sandglass Capital.

The 33rd-ranked Sandglass, which is based in London, is a special situations fund that focuses on credit. The fund is up 24 percent through the first two-thirds of 2024. That’s triple the $400 million fund’s annualized returns since its inception more than a decade ago. Maintaining a bit of equity exposure, Sandglass’ volatility runs higher than some other EM credit funds (10.7) as does its market correlation, which stood at 0.57 at the end of 2023.

Asset managers and banks have a positive outlook for the space. J.P. Morgan wrote in August that “earnings growth for EM in 2024 and 2025 is nearly 17 percent and 15 percent respectively, compared to less than 11 percent and 14 percent in the United States.” The bank said valuation spreads between developed markets and EM are more than 30 percent compared to a historical average of 24 percent.

Lazard Asset Management believes this gap, “may narrow” because of stronger earnings growth and other attractive metrics in emerging markets. But it cautions that despite China’s new robust economic policy announcement, the country’s slowing growth could still weigh on these markets.

Given Sandglass’ outperformance this year, Lozovsky has been harvesting profits and reinvesting in new opportunities, which he said may not appreciate as rapidly as some previous positions.

“We’re seeing improving macro conditions across a range of emerging and frontier markets as interest rates continue to fall which is supporting growth,” says Lozovsky, “Accordingly, increased investor sentiment has reduced the spreads in distressed opportunities.” And while he believes the investment impact of two major wars have so far been manageable, he acknowledges that can change.

[dreamilykawaiibasement]

How These Hedge Funds Posted Consistent Returns in the Riskiest Markets

How These Hedge Funds Posted Consistent Returns in the Riskiest Markets

Six of the top 50 most consistently performing global hedge funds invest in volatile emerging markets. It’s a surprising finding from Global Investment Report’s 21st annual survey over the last five years through 2023.

The six funds posted average returns of more than 12.5 percent during that period, according to the report. Four of the six were credit funds.

Emerging markets were especially vulnerable when the Fed pushed up interest rates in 2022. BarclayHedge EM Global Equities Hedge Fund Index lost 17 percent in U.S. dollar terms that year, double the 8.2 percent loss of the average hedge fund across all strategies. But the six EM funds in the Top 50 survey rallied by more than 2 percent in 2022.

These funds’ consistency was also evident in the years before and after rates soared. In 2019, 2020, and 2021, the average return of the six funds was 14.2 percent, 14.9 percent, and 16 percent, respectively. Then in 2023 they rallied an average of 16.6 percent. And through the first half of 2024, EM was the top-performing strategy, up more than 9.5 percent.

(In a webinar on October 15, the author led a discussion with EM managers including Wellington Management, Cheyne Capital, and Sandglass Capital on how they generated consistent returns.

Funds sustained their returns by sidestepping drawdowns. This was accomplished in a number of ways, according to interviews with several of the managers.

Managers said one key driver in debt is the relatively small percent of dedicated funds versus total assets.

EM-dedicated credit hedge funds control about $10 billion out of $3 trillion of existing debt, said Waha EM Credit manager Mohamed El Jamel. Multistrategy funds may trade another $10 or $20 billion.

Accordingly, he sees “more alpha potential in EM credit than in developed markets, which enjoy higher levels of research, far more liquidity, tighter spreads, less dislocation, and lower volatility.”

The second driver is a tight focus on risk management. Because emerging markets are volatile, El Jamal imposes strict position and industry exposure limits and maintains significant diversification that’s informed by historical correlations.

This has kept consecutive monthly drawdowns to just two months. The $700 million fund that’s based in Abu Dhabi, and which is number 37 on the list, has had only one down calendar year in 2014 when Waha lost 40 basis points. Over the 12 years since its launch, according to BarclayHedge, the fund has generated dollar-based annualized returns of 9.7 percent, volatility of 4.5, and trailing 5-year market correlation of 0.23 through 2023. Through the first half of 2024, it’s up more than 10 percent.

Promeritum, a $400 million London-based EM credit fund, said steady performance can be attributed to on-the-ground research. The fund has not had a down year since its launch in January 2015.

Co-managers Pavel Mamai and Anton Zavyalov credited this in part to their extensive network of local personal relationships in each emerging market in which the fund invests. This support helps identify opportunities and risks.

Published data, he said, can only take one so far in discerning trends across local politics, foreign exchange policy, business support and taxation, regulation, and litigation. “Local contacts, explained Mamai, “can help decipher what’s motivating the actions of governments and state-owned companies and then match that against what actually transpires.”

The network also promotes better understanding of what’s driving IMF and World Bank decision-making, whose statements and actions can directly affect a fund’s performance.

The 44th-ranked fund generated average annual returns of 8.4 percent through 2023, with an annual standard deviation that was a smidge over 4, and correlation to the S&P 500 of 0.18 over the past five years. Promeritum is on pace to generate comparable returns this year.

Managers said another driver of consistent performance was a well-honed macro sense. Commodity prices, interest rates, and global shipping prices and availability are significant drivers of the economic health of emerging markets—which are determined by factors well beyond their borders. During the pandemic when ports were backed-up, for example, emerging markets suffered when their products couldn’t reach the U.S.

Geopolitical conflicts, also out of their control, take a big toll on these markets. Russia’s invasion of Ukraine triggered food shortages across Africa. The wars in the Middle East increased global oil prices and added uncertainty to elections around the world.

War has a tragic human toll and puts investor capital at risk. Most PMs who owned Russian assets wrote down the entire value of their investments not long after the invasion of Ukraine began in 2022.

The rapid normalization of macro and economic policy and improving relationships with external creditors across a range of distressed sovereigns and corporate issues are driving credit opportunities across much of the market right now, explained Genna Lozovsky co-founder and CIO of Sandglass Capital.

The 33rd-ranked Sandglass, which is based in London, is a special situations fund that focuses on credit. The fund is up 24 percent through the first two-thirds of 2024. That’s triple the $400 million fund’s annualized returns since its inception more than a decade ago. Maintaining a bit of equity exposure, Sandglass’ volatility runs higher than some other EM credit funds (10.7) as does its market correlation, which stood at 0.57 at the end of 2023.

Asset managers and banks have a positive outlook for the space. J.P. Morgan wrote in August that “earnings growth for EM in 2024 and 2025 is nearly 17 percent and 15 percent respectively, compared to less than 11 percent and 14 percent in the United States.” The bank said valuation spreads between developed markets and EM are more than 30 percent compared to a historical average of 24 percent.

Lazard Asset Management believes this gap, “may narrow” because of stronger earnings growth and other attractive metrics in emerging markets. But it cautions that despite China’s new robust economic policy announcement, the country’s slowing growth could still weigh on these markets.

Given Sandglass’ outperformance this year, Lozovsky has been harvesting profits and reinvesting in new opportunities, which he said may not appreciate as rapidly as some previous positions.

“We’re seeing improving macro conditions across a range of emerging and frontier markets as interest rates continue to fall which is supporting growth,” says Lozovsky, “Accordingly, increased investor sentiment has reduced the spreads in distressed opportunities.” And while he believes the investment impact of two major wars have so far been manageable, he acknowledges that can change.

[brianway23]

How These Hedge Funds Posted Consistent Returns in the Riskiest Markets

How These Hedge Funds Posted Consistent Returns in the Riskiest Markets

Six of the top 50 most consistently performing global hedge funds invest in volatile emerging markets. It’s a surprising finding from Global Investment Report’s 21st annual survey over the last five years through 2023.

The six funds posted average returns of more than 12.5 percent during that period, according to the report. Four of the six were credit funds.

Emerging markets were especially vulnerable when the Fed pushed up interest rates in 2022. BarclayHedge EM Global Equities Hedge Fund Index lost 17 percent in U.S. dollar terms that year, double the 8.2 percent loss of the average hedge fund across all strategies. But the six EM funds in the Top 50 survey rallied by more than 2 percent in 2022.

These funds’ consistency was also evident in the years before and after rates soared. In 2019, 2020, and 2021, the average return of the six funds was 14.2 percent, 14.9 percent, and 16 percent, respectively. Then in 2023 they rallied an average of 16.6 percent. And through the first half of 2024, EM was the top-performing strategy, up more than 9.5 percent.

(In a webinar on October 15, the author led a discussion with EM managers including Wellington Management, Cheyne Capital, and Sandglass Capital on how they generated consistent returns.

Funds sustained their returns by sidestepping drawdowns. This was accomplished in a number of ways, according to interviews with several of the managers.

Managers said one key driver in debt is the relatively small percent of dedicated funds versus total assets.

EM-dedicated credit hedge funds control about $10 billion out of $3 trillion of existing debt, said Waha EM Credit manager Mohamed El Jamel. Multistrategy funds may trade another $10 or $20 billion.

Accordingly, he sees “more alpha potential in EM credit than in developed markets, which enjoy higher levels of research, far more liquidity, tighter spreads, less dislocation, and lower volatility.”

The second driver is a tight focus on risk management. Because emerging markets are volatile, El Jamal imposes strict position and industry exposure limits and maintains significant diversification that’s informed by historical correlations.

This has kept consecutive monthly drawdowns to just two months. The $700 million fund that’s based in Abu Dhabi, and which is number 37 on the list, has had only one down calendar year in 2014 when Waha lost 40 basis points. Over the 12 years since its launch, according to BarclayHedge, the fund has generated dollar-based annualized returns of 9.7 percent, volatility of 4.5, and trailing 5-year market correlation of 0.23 through 2023. Through the first half of 2024, it’s up more than 10 percent.

Promeritum, a $400 million London-based EM credit fund, said steady performance can be attributed to on-the-ground research. The fund has not had a down year since its launch in January 2015.

Co-managers Pavel Mamai and Anton Zavyalov credited this in part to their extensive network of local personal relationships in each emerging market in which the fund invests. This support helps identify opportunities and risks.

Published data, he said, can only take one so far in discerning trends across local politics, foreign exchange policy, business support and taxation, regulation, and litigation. “Local contacts, explained Mamai, “can help decipher what’s motivating the actions of governments and state-owned companies and then match that against what actually transpires.”

The network also promotes better understanding of what’s driving IMF and World Bank decision-making, whose statements and actions can directly affect a fund’s performance.

The 44th-ranked fund generated average annual returns of 8.4 percent through 2023, with an annual standard deviation that was a smidge over 4, and correlation to the S&P 500 of 0.18 over the past five years. Promeritum is on pace to generate comparable returns this year.

Managers said another driver of consistent performance was a well-honed macro sense. Commodity prices, interest rates, and global shipping prices and availability are significant drivers of the economic health of emerging markets—which are determined by factors well beyond their borders. During the pandemic when ports were backed-up, for example, emerging markets suffered when their products couldn’t reach the U.S.

Geopolitical conflicts, also out of their control, take a big toll on these markets. Russia’s invasion of Ukraine triggered food shortages across Africa. The wars in the Middle East increased global oil prices and added uncertainty to elections around the world.

War has a tragic human toll and puts investor capital at risk. Most PMs who owned Russian assets wrote down the entire value of their investments not long after the invasion of Ukraine began in 2022.

The rapid normalization of macro and economic policy and improving relationships with external creditors across a range of distressed sovereigns and corporate issues are driving credit opportunities across much of the market right now, explained Genna Lozovsky co-founder and CIO of Sandglass Capital.

The 33rd-ranked Sandglass, which is based in London, is a special situations fund that focuses on credit. The fund is up 24 percent through the first two-thirds of 2024. That’s triple the $400 million fund’s annualized returns since its inception more than a decade ago. Maintaining a bit of equity exposure, Sandglass’ volatility runs higher than some other EM credit funds (10.7) as does its market correlation, which stood at 0.57 at the end of 2023.

Asset managers and banks have a positive outlook for the space. J.P. Morgan wrote in August that “earnings growth for EM in 2024 and 2025 is nearly 17 percent and 15 percent respectively, compared to less than 11 percent and 14 percent in the United States.” The bank said valuation spreads between developed markets and EM are more than 30 percent compared to a historical average of 24 percent.

Lazard Asset Management believes this gap, “may narrow” because of stronger earnings growth and other attractive metrics in emerging markets. But it cautions that despite China’s new robust economic policy announcement, the country’s slowing growth could still weigh on these markets.

Given Sandglass’ outperformance this year, Lozovsky has been harvesting profits and reinvesting in new opportunities, which he said may not appreciate as rapidly as some previous positions.

“We’re seeing improving macro conditions across a range of emerging and frontier markets as interest rates continue to fall which is supporting growth,” says Lozovsky, “Accordingly, increased investor sentiment has reduced the spreads in distressed opportunities.” And while he believes the investment impact of two major wars have so far been manageable, he acknowledges that can change.