Man Group goes against Wall Street and bets on falling emerging markets

The world’s largest publicly traded leveraged fund is bracing for an asset meltdown. markets emerging countries, against the grain of the optimists of Wall Street.

The spectacular recovery of risk assets this year is not justified in light of economic fundamentals and should be reversed, according to the Man Groupthe London hedge fund with US$ 138 billion in assets under management.

“We expect the decline in the next couple of months,” Guillermo Osses, head of emerging market debt strategies at the fund in New York, said in an interview. “People have increased exposure, probably a good part of the rally has already occurred and now they find themselves very long on risky assets with very tight valuations, with changing liquidity conditions. That’s why we think you’re going to have a significant drop.”

Man Group shares are up 23% so far this year, off a 6% gain in the FTSE 100 index. morgan stanley It is Goldman Sachsalthough even optimists admit that the rally has made them more selective.

The emerging-debt fund that Osses manages managed to outperform 99% of its peers last year when it warned of the risk of defaults and returned 2.4%, compared with an average loss of 14% among peers, according to data compiled by Bloomberg.

For Osses, the recent rally in emerging market assets is largely explained by the decline in US Treasury cash USA since October, which represents a massive injection of liquidity that went unnoticed by investors. Treasury money parked at the Federal Reserve fell by about $349 billion between late October and mid-January, but has since risen again.

“The only explanation we can find for this significant rally is the liquidity injection from the US Treasury,” said Osses. “This liquidity injection was massive. So assets rallied and, we believe, ignored the fundamentals news.”