Goldman closes BRIC-fund

Goldman Sachs Group Inc is closing its BRIC-focused asset management unit, and it is a sign that investor sentiment in the largest emerging market economies is waning, according to an executive at an Asia-focused investment bank.

Euan Rellie, a senior managing director with global investment-banking firm BDA Partners, said Goldman's decision to end its BRIC fund (Brazil, Russia, India and China) has "real symbolic meaning" for global markets.

"Investor sentiment is poor right now for three of the four [BRIC countries], and fragile even in India," Rellie wrote in an e-mail to China Daily on Monday. "No one wanted BRICs exposure any more: investors want something broader, more nimble, and more targeted to the most healthy economies.

"The notion of the BRICs as a single entity has felt pass for a couple of years," Rellie added.

The defunct BRIC fund is merging with Goldman's Emerging Market Equity Fund, the company said in a Sept 17 filing to the US Securities and Exchange Commission (SEC), Bloomberg News reported Sunday. The goal is to "eliminate overlapping products" and "optimize" the company's funds, the filing said.

Goldman Sachs, the New York-based multinational investment-banking firm, said in its filing with the SEC that it did not expect "significant asset growth in the foreseeable future" from the BRIC-focused fund, adding that the combined emerging markets fund would be "better positioned for asset growth", according to Bloomberg.

The company also noted that its larger emerging-market fund outperformed the BRIC group in the one-, three- and five-year periods that ended June 30.

Goldman's BRIC fund had lost more than 20 percent in the five-year period that ended on Oct 23, according to data from Bloomberg. The total amount of assets under management dropped nearly 90 percent from a peak of $842 million in 2010 to $98 million at the end of September.

The BRIC acronym was coined in 2001 by Goldman's former chairman Jim O'Neill. It was later expanded to BRICS to include South Africa.

Goldman Sachs did not respond to e-mail or phone messages from China Daily seeking comment.

Andrew Williams, a spokesman for Goldman Sachs, was quoted by Bloomberg on Sunday as saying: "Over the 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."

Through Nov 4 of this year, global investors have pulled $1.4 billion from funds investing in BRIC countries.

Jorge Mariscal, chief investment officer of emerging markets at UBS Wealth Management, said that poor performance in the BRICs countries in the last five years has "lowered institutional and retail interest" in those markets.

Jan Dehn, head of research at Ashmore Investment Management Ltd, a London-based investment management firm that focuses on emerging markets, said BRICS is dying as a marketing concept because it was riven with limitations.

"But [BRIC countries] will continue to be investment destinations whose importance in the world will only increase with time, especially China," he said.

jackfreifelder@chinadailyusa.com

(China Daily 11/11/2015 page3)