Templeton’s bond chief Michael Hasenstab suffers biggest loss in Argentina sell-off
New York — The dramatic decline in Argentinian assets is wreaking havoc on some of the largest US money managers.
Funds with high exposure to the South American nation tumbled on Monday after President Mauricio Macri’s stunning defeat in primary elections over the weekend.
The biggest loser among emerging-market funds with more than $1bn was the $11.3bn Templeton Emerging Markets Bond Fund, run by bond chief Michael Hasenstab, which fell by 3.5%, according to data compiled by Bloomberg. That was its largest daily drop since the October 2008 global financial crisis.
Financial Times reported that Hasenstab's loss was as high as $1.8bn.
A spokeswoman at Franklin Templeton declined to comment. The Templeton fund had a 12% allocation to Argentina as of June 30, including treasury bonds and notes linked to the nation’s benchmark rate, according to data compiled by Bloomberg.
Argentine sovereign and corporate bonds erased $16.8bn of their value in the Bloomberg Barclays emerging-market index on Monday.
Argentine assets extended their unprecedented slide on Tuesday amid investor concern that opposition candidate Alberto Fernandez would bring back the populist policies, including currency controls, that were commonplace under Cristina Kirchner, the vice-president on his ticket. The peso hit a record low on Monday, and the yield on the nation’s century bonds spiked to an all-time high of 14%.
The plunge “shows the painful and long-lasting impact of Argentina’s belligerent treatment of creditors”, said Mike Conelius, a money manager at T Rowe Price Group in Baltimore, whose $5.8bn emerging-market bond fund slumped by 2.2% on Monday, the most in six years. About 7.3% of the T Rowe portfolio was exposed to the country.
Other large funds also suffered. The $7.5bn Ashmore Emerging Markets Short Duration Fund fell by 3.2%, while the $1.4bn Fidelity Series Emerging Markets Debt Fund dropped by 3.1%. A spokesman at Ashmore did not respond to a request for comment. Ashmore’s fund has the best long-term track record in the group. It topped 95% of peers over the past five years, data compiled by Bloomberg show. A Fidelity spokeswoman declined to comment.