Hedge funds: GCA singles out emerging opportunities
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Hedge funds: GCA singles out emerging opportunities

Of the 8,000 or so hedge funds globally, around 97% are focused on the US and European capital markets. And although opportunities in Asia, Latin America, and central and eastern Europe are being recognized, with the net amount of money flowing into hedge funds that focus on emerging-market investments rising 13% in 2005 according to Hedge Fund Research, not many investors are sufficiently confident to invest in these regions separately.

Lou Gerken, Gerken Capital Advisors “These markets... do not move in sync. To access cross-border opportunities you need to be there”
Lou Gerken, Gerken Capital Advisors

In any case, it is hard to find managers that have sufficient knowledge of individual countries to be able to take full advantage of the opportunities that lie in them.

Lou Gerken is one manager that evangelizes the value that hedge funds focusing on single emerging countries can create. He founded and is president of Gerken Capital Advisors (GCA), an alternative investment company started in 1989. Since its inception, GCA and its principals have managed and advised $4.7 billion in assets under management, and now run two hedge funds – an India fund and a Greater China fund. A Latin American fund and a Greater Russia fund will be launched soon.

“Investors are aware of the returns that investing in emerging markets can create,” says Gerken. Emerging market growth is three times the rate of G7 GDP growth, and there is less capital competing for investment in these markets. “But opportunities to invest in such markets tend to be through hedge funds or funds of hedge funds that invest in emerging markets as a whole,” Gerken says.

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