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"Retail investors have led the summer stampede out of emerging-market stocks, bonds and currencies, pulling almost twice as much money as institutional investors such as insurance companies and pension funds. . . Since the start of June, retail investors have pulled $18.1 billion from emerging-market bond funds, about one-third of the amount they had put in since the financial crisis, according to fund tracker EPFR Global. By comparison, institutional investors have pulled $9.3 billion, or about 10% of their postcrisis inflows."
There was, so far as I saw, no e.m. equity flow data. The author attributes the rush out the door to fear that the Fed will end bond purchases. One advisor attributes it, in part, to a "60 Minutes" segment on failed real estate developments in China. Another advisor (Steve Blumenthal) argues that it's the exact opposite of what they should be doing and that the emerging markets are the world's most attractively-priced markets. (GMO agrees.)
There's some not-very-strong evidence offered that institutions are buying e.m. debt at substantial discounts.
well, at least institutions are less negative on EMD (in local ccy term) than on EME... provided the US rates stabilize...(it should read 'our institution') fa
Reply to @Old_Joe: Thanks for the suggestion. Long sour on most bonds I checked performance on some at Price. Yikes - Couple EMs are off around 10% YTD. Passed on those - but bought some shares of their TIPs fund - off almost 9% YTD. A fire-sale on TIPS if I ever saw one
You may not directly link to many of the WSJ articles but going through google search sometimes works. Try this and select the "Wall Street Journal" link that comes on that page.
Got it. I misunderstood Ted, above. Well, well, well. What we have heard repeated over and over again is the same in this case, too. Mom and Pop are too chicken to hang on through bad days, and sell at all the wrong times. I just threw some money at two of my funds. The smaller portion of it went to MAINX. Falling, falling lately, and tonight, it's a penny below where I first bought it. (MAPOX is up mightily today, along with other small-caps. I hope something gloomy gets everyone's attention on the day they cash my check, driving that share price down! )
A long fund list at the above link; although multi classes of the same fund cause some of the length. However, there are only about 20 funds in the list that are positive for the year. The YTD range travels from -25% through +23%. Assuming Mom and Pop bought a mix of these vendors 3 years ago; some are much more happy than others. Also assuming that M&P may have a cutoff point at which they sell any investment; perhaps a 10% dip on their holdings is the trigger point for a sell. The WSJ article noted 33% of monies in the emerging markets areas have recently been sold. On the other hand, this also indicates that 67% have not been sold. As to the institutions and pension funds retaining most of their holdings; well, one has to suspect those folks know what they are doing today. Many big money houses and highly regarded market folks continued to be on the up side of the markets with recommendations right through the beginning of Sept. 2008. We know how that worked, eh? Many of the "em" bond funds have had decent charts/trend lines through early this year; but for many of the "em" broad based equity funds, the charts are pretty ragged (trader's charts) for the past 3 years, August to August. Most folks have not made much of a return for a 3 year period as indicated by the 3 year data at the above link; with the exception of the few funds that were either brilliant with their selections or damn lucky, or both. Lastly, I do believe that some of the decline in "em" areas is justified by the fear of rising interest rates. The "em" area has been living high from low global rates and the commodity boom(s). In my opinion, these countries can not afford to adjust higher, their internal lending rates; and are likely also concerned about currency moves. Emerging markets and related funds have had some pretty wicked up and down rides since their inception.
Comments
above worked for me twice. I just tried it and link failed. why? ah the mysteries of electronics. My apologies.
Regards,
Ted
"Retail investors have led the summer stampede out of emerging-market stocks, bonds and currencies, pulling almost twice as much money as institutional investors such as insurance companies and pension funds. . . Since the start of June, retail investors have pulled $18.1 billion from emerging-market bond funds, about one-third of the amount they had put in since the financial crisis, according to fund tracker EPFR Global. By comparison, institutional investors have pulled $9.3 billion, or about 10% of their postcrisis inflows."
There was, so far as I saw, no e.m. equity flow data. The author attributes the rush out the door to fear that the Fed will end bond purchases. One advisor attributes it, in part, to a "60 Minutes" segment on failed real estate developments in China. Another advisor (Steve Blumenthal) argues that it's the exact opposite of what they should be doing and that the emerging markets are the world's most attractively-priced markets. (GMO agrees.)
There's some not-very-strong evidence offered that institutions are buying e.m. debt at substantial discounts.
For what it's worth,
David
Well, somebody sure is.
Here's the link to their taxable bond performance. May need to click "taxable bonds" tab at top of page.
http://individual.troweprice.com/public/Retail/Mutual-Funds/Historical-Performance
https://www.google.com/search?q=Mom-And-Pop+Investors+Bolt+Emerging+Markets
A long fund list at the above link; although multi classes of the same fund cause some of the length. However, there are only about 20 funds in the list that are positive for the year. The YTD range travels from -25% through +23%. Assuming Mom and Pop bought a mix of these vendors 3 years ago; some are much more happy than others.
Also assuming that M&P may have a cutoff point at which they sell any investment; perhaps a 10% dip on their holdings is the trigger point for a sell.
The WSJ article noted 33% of monies in the emerging markets areas have recently been sold.
On the other hand, this also indicates that 67% have not been sold.
As to the institutions and pension funds retaining most of their holdings; well, one has to suspect those folks know what they are doing today.
Many big money houses and highly regarded market folks continued to be on the up side of the markets with recommendations right through the beginning of Sept. 2008. We know how that worked, eh?
Many of the "em" bond funds have had decent charts/trend lines through early this year; but for many of the "em" broad based equity funds, the charts are pretty ragged (trader's charts) for the past 3 years, August to August. Most folks have not made much of a return for a 3 year period as indicated by the 3 year data at the above link; with the exception of the few funds that were either brilliant with their selections or damn lucky, or both.
Lastly, I do believe that some of the decline in "em" areas is justified by the fear of rising interest rates. The "em" area has been living high from low global rates and the commodity boom(s). In my opinion, these countries can not afford to adjust higher, their internal lending rates; and are likely also concerned about currency moves.
Emerging markets and related funds have had some pretty wicked up and down rides since their inception.
Take care, and pillow time at this house.
Catch