Mark Mobius says finicky pension funds flee EMs

NEW YORK: You wouldn’t expect pension funds to sell in a hurry. But that’s exactly what they’re doing now in emerging markets, according to Mark Mobius.

Patient as they are, pension funds are also famously riskaverse, said the 81-year old investor who set up Mobius Capital Partners LLP after leaving Franklin Templeton Investments this year. That’s pushed them to cut risk all around, selling in both developed and developing countries, he said in a phone interview.“More and more of these pension funds are buying ETFs and when the market goes down, the tendency for them is to reduce,” Mobius said. “You have a strange situation in that although they may tend to be longterm investors, they want to get out and be safe.”

That’s bad news for emerging-market bulls who had been touting enhanced interest from US pension funds as a backstop against sustained losses in emerging equities on the grounds the funds don’t buy easily, but once they buy, they don’t sell for a long time. If Mark Mobius is right, that hope has been belied in the current selloff.