Big-name mutual funds in Wall Street suffer a decline in emerging markets

February 6
10:13 AM 2014

The performance of mutual funds managed by Wall Street's biggest names including BlackRock, Brevan Howard and T. Rowe Price has taken a beating with the decline in emerging markets, a Reuters analysis reported. As stocks and currencies plunge, some mutual funds have suffered with their performance dropping 10% so far this year. That decline has fueled the pressure to sell as investors race to withdraw more of their money, the report said.

BlackRock equity portfolio manager Will Landers who has nearly $4 billion in assets under management told Reuters, "It has been a disappointing beginning of the year." So far this year, the BlackRock Latin America Fund is already off 10%, the report said.

In general, hedge funds seem to be taking the sell-off in stride. Late in 2013, a lot of managers had lessened their emerging market exposure due to the region's uncertain economic prospects. For managers deploying short strategies, the current uncertainty also paves the way for more opportunities, the report said.

From 2009 until early last year, the financial world has looked at emerging markets quite adoringly, as investors held on to the belief that these countries would be heading the worldwide growth in the upcoming years while economies in the developed world would stay almost dormant, the report said.

However, investors who focus on emerging markets have become jittery with the recent turn of events. Reasons for their worry include the reduction of the US Federal Reserve of its bond buying program and the upcoming polls in countries like Brazil, India, Turkey and Indonesia. Their anxiety is further fueled by the street battles between protesters and authorities in Ukraine, trouble over the elections in Thailand and the bombings in Egypt, the report said.

According to Bank of America Merrill Lynch Global Research report, in the week ending January 29, fund investors around the world withdrew $6.4 billion from emerging market stock funds. This represented the largest outflows since August 2011, Reuters reported.

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