Brevan Howard Shutting Down EM Fund After Heavy Losses

0
Brevan Howard Shutting Down EM Fund After Heavy Losses
Source: Made with Photoshop

Brevan Howard is shutting down its $2.3 billion emerging market fund after losing 15% of its value last year and 1.6% of its value so far this year and fund manager Geraldine Sundstrom will leave the firm, Laurence Fletcher reports for Reuters.

Play Quizzes 4

Brevan Howard: EM funds faced high volatility in 2013

Emerging market funds had a rough year almost across the board, with uncertainty over Fed tapering driving much of the market uncertainty. “Much of this volatility was influenced by news flow in Developed Markets (for example US Federal Reserve and Bank of Japan announcements), making overall position-taking in Emerging Markets assets difficult to time,” the company said in a letter to investors.

Growing Up In The Fund Management Business: This PM’s First Stock Was A Value Stock

Invest ESG Leon CoopermanWhen portfolio managers get started in the business, their investing style often changes over the years. However, when Will Nasgovitz bought his first stock when he was 12, he was already zeroing in on value investing, and he didn't even know it. Nasgovitz has been with mutual fund manager Heartland Advisors for almost 20 years, Read More

With investors seeing the potential for double-digit DM growth, there isn’t much reason to take on the additional risks involved in EM investments. Now that tapering is underway, growing concerns around countries with high current account deficits, along with the continuing worry that China will have a hard landing, is pushing investors away from EM investments. Even when US equities fell earlier this year, most of the outflows found their way to US bonds and European equities.

Brevan Howard refunding Jan/Feb EM management fees

While the difficult investment environment is effecting everyone investing in EM, and Sundstrom certainly wasn’t the only one to get caught by the Fed’s June tapering announcement, Brevan Howard has a high standard, with its $27 billion Master Fund never having had a down year. Co-founder Alan Howard said the firm is “determined to deliver a more satisfactory outcome” this year and is refunding January and February management fees for the EM fund, reports Tommy Stubbington for The Wall Street Journal.

Recent domestic economic data has been worse than expected, which could slow the rate of tapering and buy EM some more time, but it’s hard to imagine how much difference a small delay could have in the long run. Societe Generale analyst Alain Bokobza has already said that he see “no early end to EM asset de-rating,” and that cumulative inflows to EM equities may already be at their lowest point since 2009 with no inflection point in sight. And unless the EM crash starts to threaten the US recovery, it’s hard to imagine the Fed taking that into account when making future decisions on tapering.

Updated on

Michael has a Bachelor's Degree in mathematics and physics from Boston University and Master's Degree in physics from University of California, San Diego. He has worked as an editor and writer for several magazines. Prior to his career in journalism, Michael Worked in the Peace Corps teaching math and science in South Africa.
Previous article PwC: Investment Assets To Swell To $102 Trillion By 2020
Next article Follow Up On Technical Analysis And Why To Avoid It

No posts to display