Emerging markets have proved a sketchy scenario for fund managers over recent years, according to a report by Standard & Poor's.
The report covers 35 closed or open-ended funds, domiciled in the UK or offshore.
It found that after falling by more than 20% in dollar terms over 1998 as measured by the S&P/IFCG composite index (of global emerging markets), share prices recorded a strong rally in 1999 (+62.7%) to be followed by a loss of nearly a third in 2000.
Much of this fluctuation can be attributed to the volatility of the technology, media and telecoms sectors.
Looking at asset allocation exposures 12 months before April 1 this year, the managers who performed best were those who had favoured Latin America over Asia.
S&P's associate director and global emerging markets analyst Hans Hamre said: “ It is interesting to see most managers interviewed in the sector are currently close to fully invested.
“After their experience in 1999 when many were caught out by the markets’ sharp recovery from the crisis in confidence arising from Russia’s devaluation, most managers are now cautious about running significant cash positions in such potentially volatile and illiquid markets.”
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