Overview: hedge funds invest in MEA
HFN active and inactive databases have performance and asset information for 85 unique funds investing primarily in the region of the Middle East and Africa (MEA). Of these, 59 unique products of the active database. For this report, are resources grouped into one of three classifications for their regional investment focus, the Middle East/North Africa, Pan-Africa and South Africa only.
• South Africa focused funds performed well in 2011 after backlogged 2010 while MENA funds have lagged the rest of the hedge fund industry over the past three years.
• Pan-Africa funds directly the hedge fund industry since becoming a recognizably classification in 2006, but since the beginning of the uprising in Tunisia and Egypt, average performance is almost 6%.
• HFN estimates the total assets in funds that invest primarily in all three regions was 8.78 billion dollars at the end of May 2011 with AUM in MENA strategies narrowly higher than South Africa.
Months after the initiation of the revolutions in Tunisia and Egypt, MENA average fell almost 6% and Pan-African agents decreased more than 6% while South Africa focused funds increased 7%. Themes such as investment in regions vary, obviously, but each face serious headwinds shortly.
The following pages break down the qualitative composition, investors flow trends and performance of MEA focused resources to shed light on the source of their different yields and current investor sentiment against these products.
HFN database composition and its properties
The qualitative features of the Middle East and Africa focused resources in HFN database gives an indication of the dominant characteristics of these products:
• South Africa focused Fund launches was greatest in 2003 and continued in the above average by 2006, but has declined while the liquidations of cow's milk added in 2010.
• Mena Fund launches peaked in 2006 and 2007, followed by the above, average liquidation in 2009. New launches have not been near the pre-2008 prices.
• Pan-Africa funds is a relatively new group, with the launches were originally ursprungshalten 2007 and again reaches a high 2010.
• Compared to MENA focused resources, South Africa and the Pan-African agents had minimal shutdowns after the financial crisis.
• The majority of MENA funds operated by the arab States and South Africa running out in South Africa funds, but the majority of the Pan-Africa funds operated out of London.
Total assets levels
HFN has not historically tracked assets and routes for Pan-Africa and South Africa focused means of MENA. In addition, estimates the AUM below for funds which invest mainly in the regions and the total hedge fund AUM invested in the region. Total AUM hedge fund invested in the region is probably much higher because of the multi-regional emerging market funds, including investing:
• Mena focused funds AUM peaked in Q2 2008 nearly 10 billion dollars. The Summit was concurrent with high total hedge fund industry AUM, while supply decline after the financial crisis was more dramatic and recovery slower. MENA Fund AUM reached a low of less than 4 billion dollars in Q1 2009, and is now only slightly larger.
• Investor reactions to civilian uprising in the MENA region was net redemption 2011. Redemption from MENA focused strategies speeded up in March and April 2011 peaked.
• South Africa focused funds had approximately 3.27 billion dollars in AUM at end of May. Investor redemption passed appropriation during the first three quarters of 2010, but the trend seems to have reversed in 2011, but the growth has been slow.
• Pan-Africa focus Fund AUM reached estimated 977 million dollars at the end of May 2011. Despite good performance relative to industry in 2010, there were net redemption during the year. Core growth in 2011 is 2.8 per cent, which is slightly lower than average in the industry.
Correlation of returns
Figure 6 shows the relationship between monthly for MEA focused funds to other regional and country specific emerging market HFN indices and relevant equity benchmarks for three specified time frames. Information is useful to compare historical relationships and how they have changed.
• South Africa focused funds have historically had a low correlation to the country's stock markets. The ratio has been reversed in the last 12 months.
• Mena focused funds historically had low but positive correlations to other emerging markets and regional equity benchmarks, but these correlations increased and be high after the financial crisis.
• Pan-African Fund correlations have been added during the financial crisis, but has fallen back in recent months, but they still remain above historical levels.
• Mena fund performance resembles most closely that traditional emerging markets, while the Pan-Africa and South Africa funds tend to be less correlated. This illustrates the different growth stories in Africa and the larger emerging markets which are more closely related to the buy-out market influences.
Compared to other emerging markets
The table below, Figure 7 and 8 and the table at the bottom of the report, compare the returns from Mea funds to emerging market hedge fund HFN indices and regional equity indices.
• Since 2001, South Africa focused funds crisis management MSCI South Africa Index during the down months only once, the best against the record in the three groups.
• The average outperformance in the index, with South Africa funds down months since 2001 is more than 700 points. The average underperforming during positive index is slightly worse months than 450 bps.
• In the past two years, South Africa funds have seen their average outperformance in equity benchmark down months decreased and have also seen underperforming during index up months from worsening.
When comparing historical returns the last two years, only MENA resources has continued to produce returns with greater average outperformance in equity index benchmark down months than average underperforming under benchmark up-months.
Middle East and Africa UCITS products and funds of funds
HFN can create benchmarks for further subclassification of MEA products that meet the standards set out in the directive on UCITS funds of funds investing in the region.
Forward
Investors ' interest in funds focused on the markets of the Middle East and Africa have been below average for the year 2011, which is a clear indication investors aren't comfortable with the current social and political climates in the region. Outside of South Africa, has so far shown decision performance wise. In hedge fund space there is a history of the returns covered by investors who recognizes emerging opportunities sooner than the rest. The last known example is in based security after the financial crisis.
There are a number of reports from the Oakland Institute require attention for private investments, including hedge funds and other institutional investors, in soil in Africa with an eye on the development of agriculture. Reports that raises the questions of the extent to which government interests adapt to the local population and to long-term best use of land, but the existence of the research is evidence of potentially profitable opportunities in these markets. Still, there will always be political uncertainty and given the effectiveness of the insurgency in northern countries, there is still a high risk to invest in the region. In addition, it is important to remember that past performance has proven that the MENA and Pan-Africa focused funds showed high correlation to developed markets in times of global stress.
Click here to read the full report.
No comments:
Post a Comment