Despite a three-week tumble for emerging markets funds, Franklin Templeton on Thursday introduced a new fund focused on four developing countries, The Wall Street Journal reports.
The BRIC fund, already offered to investors overseas, bets on companies in Brazil, Russia, India and China. The Franklin Templeton fund is the first of its kind offered to U.S. investors, according to Morningstar.
Since 2003, BRIC funds have delivered impressive returns, with the Morgan Stanley Capital International BRIC Index rising 300% during that time span. In the past few weeks, however, emerging markets funds, on average, have slumped 12%, according to Morningstar.
"Let's put it this way," said Mark Mobius, the new fund's manager and head of the emerging markets group for Franklin Templeton. "For our sales guys, it's a terrible time to launch; but for investors, it's a great time."
George Hoguet, an emerging market strategist for State Street Global Advisors, is not convinced the recent slump creates an opportunity for investors.
"BRICs benefit from large populations and growing domestic demand. But that doesn't necessarily equate with stock-market returns. Diversified funds should offer better long-term performance with less volatility," he said.
Mobius concedes that Templeton's BRIC fund should supplement to a more diverse emerging-market portfolio. Brazil and China make up the majority of the BRIC assets, with India representing the smallest portion. The minimum investment for the new fund is $1,000, with expenses of about 2.15%.
The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.