Hedge funds, which have become increasingly important players throughout the fixed-income markets in the past couple of years, have been herding with especial zeal into emerging market debt. While hedge funds make up 15% of total fixed-income volumes and 25% of the trading volume in speculative-grade debt, for instance, they now make up more than 45% of trading volume in emerging markets, up from 30% last year.
The numbers have led Greenwich Associates to say that emerging markets have now reached the point at which they could not function efficiently without hedge fund involvement.
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