Long-only hedge funds hold key to emerging markets

Addressing common institutional approaches to long-only emerging markets allocations, hedge funds are less volatile and produce higher returns than mutual funds or ETFs

Since the 2008 financial crisis, investors have flocked to emerging markets (EMs) for return generation as developed markets (DMs) have faced low interest rates and slowing growth. A common institutional investor approach to EMs is to combine a long-only allocation with a long/short, hedged allocation. Much has been written about hedged investing, but less about approaches to implementing the long-only EM allocation.

There are two routes institutional investors can pursue to implement their long