FOR THE PAST FEW QUARTERS, THE TRAXIS PARTNERS global macro hedge funds have been busy tweaking their emerging-markets portfolios. In the second quarter alone, they added Chinese equities, nearly quadrupled their exposure to South Korean stocks and took an initial stake in Brazilian issues. In the same period, the firm — founded by onetime Morgan Stanley chief global strategist and famed emerging-markets investor Barton Biggs, who passed away earlier this year — eliminated its direct exposure to stocks in Japan, Russia and Taiwan.
|| Illustration by Edel Rodriguez|
Yet you won’t find a slew of international company names in the $1.2 billion hedge fund firm’s roughly $500 million equity portfolio. Rather, the bulk of the firm’s portfolio of U.S.-listed equities consists largely of exchange-traded funds, or ETFs. Its two largest holdings at the end of the second quarter were iShares MSCI Emerging Markets Index Fund, an ETF that tracks the MSCI...