Emerging Market Funds: The Thai Impact
Hedge funds and mutual funds have poured big money into emerging markets. Which funds have the biggest exposure, if the “Thai Financial Flu” spreads? CNBC’s Melissa Lee investigated – and revealed her findings on today’s “Power Lunch.”
Certainly with emerging markets on such a run recently, this is an area where many investors have seen increasing exposure.
Thailand we should note, is a very small part of the emerging market picture. It's 2% of the benchmark MSCI Emerging Markets Index. The big concern really is: whether the fear will spread.
Lee said that we don't have specific figures on Thai exposure, but here's the potential: there are 341 funds with emerging market exposure, according to Hedgefund.net'sdatabase of 7,000 funds.
At the end of the third quarter, There were $157 billion dollars in emerging market equities. That's up about 50% from a year ago, with exposure to Thai equities will be a subset of that.
We should note that the figure does not include exposure to Thai currency. And it doesn't include exposure to other funds, like Multistrategy, might have.
George Lucace, Senior Managing Director Of Channel Capital, which runs Hedgefund.net, says “If there is fallout (losses) it will likely be the neophyte funds that will be hurt."
For the more seasoned funds, who have seen or lived through the Asian Financial Crisis of 1997 this will probably not be a major setback - especially when emerging markets is one of the best performing parts of the industry - up 17.2% this year (better than the overall industry, up 11.8%)
For the average investor-- they might want to check their portfolios. Some international funds do have specific Thai exposure.
Eaton Vance Mutual Funds--has two funds that have the highest Thai exposure. The Small Companies Fund with 13.5%. and The Emerging Markets Fund, with 10%. both doubled their exposure to Thailand in the past year.
Delaware also has 2 funds with about 7% exposure andFidelity Advisor Emerging Asia has 5.9% in Thailand.
The big question in the days to come for all investors, in addition to what will happen in Thailand, is whether what's happening in Thailand will impact other markets.
*All data courtesy of Morningstar