Wednesday, November 25, 2009


Emerging Markets Funds Rally; Fair Value or a New Bubble?

As Investor Risk Appetite Returns to Normal, FrontierMarkets are Now Poised for Growth

From the Fourth Quarter, 2009 issue of Barclay Managed Funds Report. The full report also includes 24 hedge fund and managed futures performance ranking tables and in-depth manager profiles. Subscribe. View Roundtables from back issues.

Oh, what a difference a year can make! This time last year the global markets were on the verge of Armageddon, and investors could not pull their capital out of any risk-based asset class fast enough, let alone one of the riskiest asset classes,
emerging markets.

The aggregate emerging markets were hit particularly hard, with equity losses of more than 50% on $50 billion of fund outflows. It would seem that investors had finally had enough of the frivolous risk taking that has all too often driven many
a market to bubbly proportions. Fast forward nine months, however, and emerging
market equities have advanced more than 60% year-to-date through September, and fund inflows have returned to a breakneck pace. It’s not overly evident where the steam for this recent rally is coming from – whether it’s the few trillion dollars of global stimulus spending, a serious case of investor amnesia, or a sense of urgency to win back the investment losses from 2008.

Perhaps the emerging markets were just simply oversold and may not be susceptible
to the lingering economic downturn and eventual hangover effects of a few trillion dollars’ worth of debt. Whatever the cause, it appears that the emerging markets are set to post spectacular returns for all of 2009, although a keen eye may be critical to determine the inflection point between fair value and a new and improved bubble. To review the opportunities and risks in emerging market investments, we have assembled a panel of experts with hands on experience in the sector. Our panel includes:

Ajay G. Jani, Gramercy LLC
Gavin Joubert, Coronation Fund Managers
Ian McCall, MSc, Argo Group Limited

The complete article will be available on the website in February 2010. Subscribe to receive each issue of the Barclay Managed Funds Report as it comes out.

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