In an environment where billionaires like Ken Fisher are throwing vast amounts of cash around the world on strategic calls, you can see why emerging market sentiment is confused.
Fisher dumped 20.4 million shares of the iShares MSCI Emerging Markets Index (NYSE:EEM) and another 1.98 million shares of the Vanguard equivalent, Vanguard MSCI Emerging Markets ETF (NYSE:VWO) last quarter, accounting for a full $1 billion in outflows from the asset class in the process.
He did so, ironically, in what is being called a “contrarian” bet against too much ebullience in the emerging markets. He noticed that conditions were improving in the developed world, so he moved.
It is hard to say just how “contrarian” that is. That is simply good trading strategy.
Admittedly, Fisher is now underweight emerging markets, compared to most fund managers who are still heavily overweight the asset class.
But is it really contrarian to sell in a quarter where many major emerging markets — India, Brazil were losing ground or even correcting?
A lot of marginal dollars like this were thrown off the boat. The markets traded like that well into the quarter-end rally that went on into early April, which indicates that the sellers took a long time to unwind their bets — and by that time, those bets really did look “contrarian.”
Emerging Money provides insightful and timely information about the increasingly important world of Emerging Market investments. CNBC Emerging Markets Contributor Tim Seymour leads the team of Emerging Money to bring you cutting edge global news and analysis.
About Tim Seymour: Tim is a founder of Emerging Money. He is a founder and Managing Partner at Seygem Asset Management, and The Emerging Markets Contributor to CNBC. Seygem Asset Management focuses on investing throughout the global emerging markets asset class. With a view that emerging and developing economies will continue to outpace the economic growth and advancement of developed economies, Seymour has devoted a career to investing in the dominant markets of tomorrow, today. Seymour’s career has included significant experience in both alternative asset management (hedge funds) and capital markets, having launched two hedge funds, and built the largest Russian broker dealer in the USA. Seymour started his career at UBS, focusing on international credit (cash, swaps, forex) in a specialized hedge fund group (New York). Seymour completed the firm’s training program after graduating with an MBA in international finance from Fordham University. Seymour received his undergraduate degree at Georgetown University.