The WSJ reports, "Pioneer Investment,the Boston-based money manager, which oversees roughly US$250 billion in assets, this month began to move money into emerging markets, where it had previously been running an underweight position, said group chief investment officer Giordano Lombardo".
“The most constructive approach has been very recent…so in the past two weeks,” Mr. Lombardo said. Key to this decision is Pioneer’s long position in Chinese stocks, an admittedly against-the-grain view, he said. Hong Kong-listed Chinese stocks are down 9% so far this year, one of the worst-performing markets in the world.
“The entire emerging market story will be driven by what happens in China,” he said. “We are not saying that everything is rosy–there are challenges–but I think our job is to balance the positive and negative.” China’s efforts to clamp down on excessive credit growth is among those positives, he said, as well as an eventual narrowing between ultra-loose monetary policy in the U.S. and tight monetary conditions in China.
Pioneer’s increased investment puts it among other large money managers starting to give emerging markets a chance again. In March, U.S. mutual-fund company American Funds launched a Developing World Growth and Income Fund, which invests in dividend-paying emerging-markets stocks. The company famously eschews hot market trends and hadn’t launched a stock fund since 2008.
Better returns for emerging markets after years of underperformance are helping make a case for money managers to get back into the asset class. The MSCI Emerging Market Index is up 7.4% in the past three months, far outpacing a 2.5% rise for the MSCI EAFE index, which tracks developed markets.
