Emergent slump.IN a bad May for most mutual funds, emerging-market funds did the worst. Funds specializing in frontier-economy stocks from China to Chile took a 10.1 percent tumble through most of last month, according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. Bloomberg data. That was more than double the 4.5 percent loss suffered by international funds focused on developed economies, and more than triple the 2.9 percent setback that hit the Nasdaq composite index Nasdaq Composite Index An index that indicates price movements of securities in the over-the-counter market. It includes all domestic common stocks in the Nasdaq System (approximately 5,000 stocks) and is weighted according to the market value of each listed . You could almost hear the exit door slamming as investors pulled their money out. Over a four-week period, emerging markets stock funds with assets totaling $90.4 billion had outflows of $4.7 billion, according to EmergingPortfolio.com Fund Research in Boston. At that rate the whole category could vanish into thin air by New Year's 2006. The reasons for the stampede--stingier credit in China and the U.S.--don't displace dis·place tr.v. dis·placed, dis·plac·ing, dis·plac·es 1. To move or shift from the usual place or position, especially to force to leave a homeland: the longer-term case for sticking around. "One of the major themes that we are monitoring closely is the overall improvement in the fundamental financial condition of emerging markets." said Greg Jensen and Jason Rotenberg in a report published this week by Bridgewater Associates Bridgewater Associates is a global investment manager that manages approximately $160 billion in assets. Approximately $32 billion is invested in the firm's hedge fund strategy, Pure Alpha, making it one of the largest hedge funds in the world. Inc. in Westport, Conn. According to Bloomberg data, the Morgan Stanley Capital International Morgan Stanley Capital International (MSCI) This firm publishes a number of well known benchmarks, such as the MSCI World Index. Emerging Markets Index has averaged a respectable 8.2 percent annual gain over the past 15 calendar years. But almost all of that progress was concentrated in a few short bursts. Eight of the 15 years produced losses, including a decline of 27.5 percent in 1998. Volatility, thy name is "______ thy name is ______" is a catch phrase use to indicate the completeness of which something embodies a particular quality, usually a negative one. History The origin of the term is generally agreed to come from the Shakespearean play Hamlet (). "emerging markets." Things to worry about? China has investors watching nervously as it tries to throttle down its fast-growing economy without stalling it. In India, the Mumbai stock exchange's Sensex index plunged 11 percent on day May 17 and rallied 8 percent the next as investors scrambled to assess the likely form and direction of a new government. Another concern: the expectation that the U.S. Federal Reserve will start raising interest rates. With bank lending rates so low, emerging-markets stocks are widely presumed to have been pumped up by speculators using cheap credit. When the Fed starts playing party-pooper, the reasoning goes, the lights will go out on emerging markets. But the question for longer-term investors is: What if, as seems entirely plausible, world economic growth brings outsized out·size n. 1. An unusual size, especially a very large size. 2. A garment of unusual size. adj. also out·sized Unusually large, weighty, or extensive. Adj. 1. benefits to the newer economies in the years ahead? The risks of emerging market funds are still practically limitless. Then again, for long-term investors Long-term investor A person who makes investments for a period of at least five years in order to finance his or her long-term goals. , so might be the rewards. |
|
||||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion