Are mutual funds chasing performance and expecting short term profits?
Rationale for the performance chase: 1. Mutual fund managers are buying corporate bonds, yields are high because of increased fear corporates will default. The mutual funds want the earnings to report to their shareholders. 2. Mutual fund managers have spent $4.9 billion for emerging market companies. MSCI emerging market index is up 34%. Brazil, China, India, and Russia claim internal strength growth. 3. There has been a $7.8 billion investment in natural resources and precious metals suggesting manufacturing orders or anticipation of increased order is occurring. Mutual funds are chasing commodities and junk bonds. 4. In the mid 1990s, Mexico was totally dependant on the flow of money from American mutual funds and pension funds. Mexico offered to exchange peso-denominated bonds from the tesobono, a short-term note indexed to the dollar – a promise to protect investors against devalutation, a promise to maintain, as the Peso declined against the dollar Do you think Mutual funds will
