The Resurgence of Emerging Market Macro Investing in 2026

The resurgence of emerging market (EM) macro investing in 2026 has been nothing short of remarkable, driven by a confluence of structural tailwinds and strategic positioning in under-owned, high-conviction strategies. Hedge funds specializing in EM macro, including Kirkoswald Asset Management, Brevan Howard, Pharo Management, and Amia Capital, have outperformed broader macro hedge fund benchmarks by significant margins, with returns ranging from 13.5% to 19.6% through November 2025 according to Bloomberg reports. This outperformance underscores a shift in investor sentiment toward EM assets, which are now being repositioned as a compelling source of near-term alpha.

Structural Tailwinds: Dollar Weakness and Real Yields

A key driver of this resurgence is the sustained weakness of the U.S. dollar, which has made EM assets more attractive to global investors. As of November 2025, the dollar's decline has been amplified by divergent monetary policies between the U.S. and EM central banks, with many EM economies embarking on aggressive rate-cutting cycles to stimulate growth. This dynamic has created a stark contrast in real yields, with EM sovereign and corporate bonds offering returns that dwarf their developed market counterparts. For instance, Pharo Management's Macro Fund capitalized on this trend by taking long positions in EM currencies and sovereign credits, generating 15.7% returns in 2025. Similarly, Amia Capital's focus on local rate markets in Brazil, Poland, and South Africa, as well as distressed sovereigns like Argentina and Ukraine, has yielded outsized gains.

Political Catalysts: Elections and Policy Reforms

Political events in key EM markets have further amplified opportunities. Upcoming elections in Colombia, Brazil, Hungary, and Peru have spurred policy reforms and investor optimism, particularly in sectors like energy, mining, and infrastructure. For example, Argentina's structural reforms and progress on IMF debt restructuring have restored confidence, attracting inflows that directly benefited funds like Amia Capital. Meanwhile, U.S. political dynamics-particularly the lingering influence of Donald Trump's pro-trade rhetoric-have encouraged capital to flow into EM markets as investors hedge against potential protectionist policies. These developments highlight the importance of political risk management in EM macro strategies, where high-conviction bets on policy-driven narratives can yield substantial rewards.

Commodity Trends and Inflow Momentum

Commodity price movements have also played a pivotal role. Goldman Sachs Research forecasts that EM stocks will deliver approximately 16% total returns in 2026, supported by robust earnings and falling U.S. interest rates. J.P. Morgan Global Research echoes this optimism, projecting double-digit gains for EM equities amid global economic resilience and AI-driven demand for raw materials. Argentina, a case study in commodity-driven recovery, is expected to grow 4% in 2025 and 3.5% in 2026, bolstered by investments in its energy and mining sectors.

Inflow momentum into EM macro strategies has accelerated in late 2025 and early 2026, with non-resident portfolio investment rebounding sharply after a weak first half of the year. This surge has been fueled by currency appreciation against the dollar and narrowing CDS spreads, reflecting improved risk appetite. Central banks in Brazil and Hungary, for instance, have initiated new easing cycles, further supporting local currencies and credit markets. These trends suggest that EM macro strategies remain under-owned relative to their potential, offering a unique window for investors seeking uncorrelated returns.

Strategic Positioning for Near-Term Alpha

The outperformance of Kirkoswald, Brevan Howard, Pharo, and Amia underscores the value of strategic positioning in EM macro. Kirkoswald's 19.6% return in 2025, for example, was driven by its focus on EM sovereign debt and currency arbitrage, while Brevan Howard's $1 billion emerging market fund leveraged high real yields and policy-driven dislocations. These strategies, though concentrated in niche markets, have demonstrated resilience amid macroeconomic volatility-a critical attribute in today's fragmented global landscape.

Investors are now being urged to reallocate capital toward EM macro strategies, which remain attractively valued despite recent inflows. The broader EM macro hedge fund index returned 17.5% through October 2025, outperforming global macro peers. With U.S. rates expected to remain accommodative and EM economies continuing to delever and restructure, the case for immediate allocation shifts is compelling.

Conclusion

The resurgence of EM macro investing in 2026 is not a fleeting trend but a structural re-rating of an asset class long undervalued. By leveraging dollar weakness, political catalysts, commodity trends, and inflow momentum, high-conviction EM macro strategies offer a rare combination of diversification and alpha potential. For investors seeking to capitalize on this shift, the window is narrowing-positioning now is essential to secure exposure to a market poised for sustained outperformance.