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Investor Funds Take on Big Losses Because of Argentina Stock Market Exposure

The Argentina Stock Market Exposure: Why U.S Investors Could Be Facing Big Losses 

In August 2019, Argentina’s stock market dropped almost 50% after primary polls indicated that the current president of Argentina, Mauricio Macri (“Macri”), was in serious jeopardy of losing his October 27, 2019 re-election bid.  

The large drop in Argentina’s stock market also sent shockwaves across the South American country’s debt market, as investors feared that Argentina was poised for another debt default, the second one in recent memory. 

Over the next few months, the Argentina stock market calmed down and the price to insure Argentina debt, called Credit Default Swaps (“CDSs”), began to come back closer to normal levels, after almost tripling in August.  

However, turmoil has returned again.  Macri recently lost his primary election, meaning he will not even be a part of the October 27, 2019 election, guaranteeing a change in leadership in South America’s second-largest country.

U.S Based Funds That Have Argentina Exposure 

These large political changes have wreaked havoc on Argentinian assets, but, luckily have not yet spilled over into the rest of the world.  

Nevertheless, many investors have significant exposure to the stock market in Argentina, often without even realizing it.  The four largest U.S. based funds in terms of exposure to Argentina gave all lost significant value.  

Those funds are:

  • Franklin Templeton Emerging Markets Bond Fund (“FEMGX”)
  • Ashmore Emerging Markets Short Duration Fund (“ESFIX”)
  • T. Rowe Price Emerging Markets Bond Fund (“PREMX”)
  • Fidelity Series Emerging Markets Debt Fund (“FEDCX”)

These funds vary in the amount of exposure they have to the Argentina stock market, but all have significant exposure relative to their overall assets.  

For example, Franklin Templeton’s FEMGX fund had 12% of its assets in Argentina debt while T. Rowe Price’s ESFIX fund had about 7.3% of its assets tied to Argentina.  All of these funds have lost 3% or more of their value as a result of Argentina and stand to lose significantly more if Argentina’s situation gets worse.

Broker Fraud And Investor Claim Lawyers 

Emerging market funds, like these four, are often sold to U.S. investors as a way to diversify away from U.S. based investments and a way to obtain the higher yields offered in many other countries.  

While there may be some legitimate reasons to invest in these types of funds, they come with very different, and often much higher, risks than U.S. based investments and are not suitable for almost any investor in any level of concentration.

If you have lost money in any of these funds, or in any other “emerging markets” fund, you may reach out to our attorneys for a free no-obligation consultation of your options.  SSEK’s attorneys and staff collectively have more than 100 years of experience in the securities business and securities law and works to help investors all across the U.S. as well as investors from abroad.

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