EM Hedge Fund Capital Surges: HFR

Hedge funds focused on emerging markets saw capital levels soar in the first quarter of 2025 thanks to strong performance and increased interest in EM generally among investors, according to indexation and analysis firm HFR.

In its latest Emerging Markets Hedge Fund Report, HFR says that funds in the EM sector ended Q1 with an estimated $259 billion in assets under management – the highest since Q4 2021. Within this, capital invested in Asian hedge funds rose slightly to an estimated $132.7 billion.

A lot of the capital increase was due to performance, however, the HFR Emerging Markets (Total) Index, which covers all regions, rose 2.2% in Q1 – and even managed to generate further gains amidst the mayhem of the tariff issue, rising to +4.8% at the end of May.

“Emerging markets hedge funds have successfully managed risk between uncertain geopolitical/military conflicts and evolving trade/tariff risk, with wide ranging impacts across energy, trade, currency, technology and equity markets,” says Kenneth Heinz, president of HFR. “Cryptocurrency volatility also surged through mid-2025, with managers navigating dramatic policy shifts and innovative platforms and sovereign initiatives.

“As these risks not only shift and evolve but converge it is likely that leading global institutions and investors will increase allocations to innovative, sophisticated EM and cryptocurrency hedge funds for specialised access to these powerful trends,” he adds.