Vol: 15, Issue: 2 2025

Page: 013-040

Hedge Funds' Response to Geopolitical Instability: Investing in Emerging Markets During Political Crises

Aarav Bhardwaj, Aakash Dhananjay Shanbhag

http://doi.org/10.37648/ijtbm.v15i02.002

This study examines the behavior of hedge funds during geopolitical crises in emerging markets, focusing on four major global events: the U.S.-China Trade War, the COVID-19 pandemic, the Russia–Ukraine conflict, and the Israel–Hamas war. Using fund-level holdings data sourced from the EDGAR SEC database, the study employs Chi-Square, ANOVA, and Kolmogorov–Smirnov statistical tests to analyze portfolio shifts among prominent hedge funds including Bridgewater Associates, Point72 Asset Management, Renaissance Technologies, and Two Sigma. The analysis evaluates both average portfolio values and asset-level changes to capture nuanced behavioral patterns. Results indicate that while most hedge funds display structural stability across crises, select firms like Bridgewater exhibit targeted rebalancing. KS test findings also reveal hidden asset-level repositioning beneath surface-level consistency. These observations challenge linear assumptions of hedge fund behavior in volatile environments and suggest a layered strategic approach that combines apparent portfolio steadiness with tactical internal adjustments. The study offers valuable insights for investors and policymakers seeking to understand hedge fund dynamics under geopolitical stress.