Broad Reach Investment Management, a London-based emerging-markets macro hedge fund, is beating peers by putting all of its cash allocation for frontier markets into recovery stories in Egypt, Nigeria and Pakistan.
The fund is betting that devaluations, interest-rate hikes and external loans will curb currency volatility in those countries and that high coupon rates will compensate for any declines in bond prices. It’s a new strategy for Broad Reach, which made 14% last year with its long-short positions in credit and rates across emerging markets. In the first quarter, the fund is up 12%.