Iraqi Growth Attracts Emerging-Market Investors

For Grant Felgenhauer, a money manager whose hedge fund owns $110 million of Iraqi equities, the 15 explosions that rocked the country on a single day in mid-January weren’t a reason to stop buying. “The Iraq that is unfolding in Baghdad is not the Iraq you read about in the headlines,” says Felgenhauer, a portfolio manager at Euphrates Iraq Fund.

Felgenhauer, who previously traded Russian stocks at Bill Browder’s Hermitage Capital Management in Moscow, last year earned a return of 28 percent on his Iraq holdings, according to data compiled by Bloomberg, with bets on Bank of Baghdad, the country’s biggest commercial lender, as well as Baghdad Soft Drinks and Al-Mamoura Co. for Real Estate Investment. That performance, compared with a 9.5 percent decline for Iraq’s ISX General Index, helped make New York-based Euphrates the fourth-best-performing emerging-market fund managing more than $50 million in 2013, outpacing gains at far bigger rivals such as asset manager BlackRock.