Credit managers have been selling out of local currency bonds -- a big loser for long-only funds in January -- in favor of dollar-denominated assets, reckoning the risk of further currency falls had grown, several investors in credit hedge funds said.
A handful of macro funds, which profit from speculating on shifts in the global economy, have even made money after betting on the U.S. dollar rising.
The flagship fund of Pharo Management, which runs around $3 billion in assets, had gained 2.2 percent by January 17, according to data seen by Reuters.
Some currency funds also performed well, thanks largely to bets the U.S. dollar would strengthen. Boston-based P/E Investments rose about 10 percent in the first month of the year, one of its investors said.
Clem Miller, investment strategist at Wilmington Trust Investment Advisors, cautioned, however, that investors might not be ready to stop dumping emerging markets just yet: "Panic plays a big role when it comes to emerging markets."