Emerging Markets

Goldman Sachs Says Goodbye To BRIC Fund After Losses Burn Assets

Tom Burroughes Group Editor Dubai 10 November 2015

Goldman Sachs Says Goodbye To BRIC Fund After Losses Burn Assets

The firm has shuttered a BRIC fund, merging it with other emerging market holdings.

Goldman Sachs, the firm accredited with coining the acronym “BRIC” at a time when these four emerging markets were seen as strong investment propositions, has shuttered the fund bearing that name following heavy losses.

The nine-year-old fund has been closed because it doesn’t expect “significant asset growth in the foreseeable future,” Bloomberg reported, citing a filing to the US Securities and Exchange Commission, the US regulator.

This publication contacted Goldman Sachs about the matter and the firm issued the following statement: “Over last decade emerging market investing has evolved from being tactical and opportunistic to being a strategic part of most asset allocations. We continue to recommend that our clients have exposure to emerging markets across asset classes as part of their strategic asset allocation.”

Jim O’Neill, the Goldmans economist, is renowned for having come up with the term around 14 years ago.

While markets remained strong for a period after the 2008 global financial turmoil, they have hit headwinds over the past two to three years. The prospect of higher US interest rates has raised the spectre of money flowing out of emerging markets, while the deceleration of China has hit commodity-producing nations such as Brazil. Russia’s falling out with the West over the annexation of the Crimea and the associated sanctions have hit the Russian rouble, while Russia has also suffered from falling oil prices. India has fared relatively better, although so far this year its markets haven’t sustained the strong gains seen during 2014.

The MSCI BRIC Index is down 7.81 per cent (in dollar terms; source: MSCI Barra).

Bloomberg reports that Goldmans’ BRIC fund has lost 88 per cent of its assets since peaking in 2010. The report said this fund is being absorbed by the Emerging Markets Equity Fund as part of Goldman Sachs’ efforts to “optimise” its assets and “eliminate overlapping products”, to quote the terms of a 17 September filing.

The BRIC fund lost 21 per cent in the five years through to 23 October, the last trading day before the merger. Its assets declined to $98 million at the end of September after peaking at $842 million in 2010, according to data compiled by the news service.


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