Ranking the Buyside: Beaten by the Index

Jul 1, 2009

Exceptional volatility caused by the global financial crisis has wiped out much of the last five years of hefty fund gains. Managers struggle to position for recovery.

by Ben Miller

Fund managers focused on Latin America were caught with their pants down when global markets erupted in 2008. Though many will claim in hindsight to have had doubts about subprime mortgages or emerging markets valuations, few were prepared for the mayhem in even the region’s best equipped economies.

Much of the last few years of bumper gains were erased by last year’s panicked selloff. As of late May, a Lipper average of US-domiciled EM debt funds – which typically have at least a third allocated to LatAm – posted a one-year annualized total decline of 8.66%, much more than the 1.32% lost by JPMorgan’s EMBI Global Diversified index, the sovereign debt standard. Five-year annualized returns were 8.10%, compared to an 8.23% gain for the EMBI.

Those at the top of the list are beating the index, but not by much. The...

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