Investors have flocked to emerging-markets mutual funds and ETFs this year, but when the Dubai's credit crisis hit, around November 25, many funds also took a hit and have since recovered the Wall Street Journal
In 2009, diversified emerging market exchange-traded funds saw a boost of $13.2 billion from hungry investors, with year to date inflows nearing $60 billion. Emerging market stock funds also saw a rise, gaining more than 70 percent through December 1.
However, when Dubai announced its massive debt, many funds were injured. The iShares MSCI Emerging Markets Index Fund
, one of the largest ETFs, dropped 4 percent on Friday, the 27th.
Other ETFs with U.A.E. exposer include the Market Vectors Gulf States Index ETF
, the PowerShares MENA Frontier Countries Portfolio
and theWisdomTree Middle East Dividend Fund
"The Dubai situation is a signal that investors can't blindly rely on governments to bail out troubled companies," Alec Young
, international equity strategist at Standard & Poor's
Equity Research, told the Journal.
Many of the funds effected are already beginning to recover assets.
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