Star fund manager Michael Hasenstab lost $1.8bn in a single day

Bond funds run by Michael Hasenstab, one of the fixed income market's biggest investors, lost nearly $1.8 billion (€1.6 billion) in a single day during the stampede out of Argentine assets that followed the drubbing of president Mauricio Macri in this past weekend's primary elections.

Mr Hasenstab, the star manager at California-based Franklin Templeton, has been one of the biggest buyers of Argentine debt, and six of his funds with the most significant exposure to the country suffered large drops in value in Monday's rout, according to Financial Times calculations.

He is known in the Republic for making a €5.6 billion return on investments in Irish debt during the financial crisis.

Chaos gripped Argentine markets on Monday after a stronger-than-expected electoral showing by Peronist candidate Alberto Fernández and his running mate, former president Cristina Fernández de Kirchner. It continued on Tuesday – although to a smaller magnitude – amassing even more losses for investors.

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The Argentine turmoil both reflected and added to wider turbulence in emerging market currencies and bonds, which lost over 1 per cent on Monday, exacerbating the losses suffered by several Franklin Templeton funds.

Exposure

Mr Hasenstab’s $11.3 billion Templeton Emerging Markets Bond Fund, which has an exposure to Argentine debt of more than 10 per cent according to Morningstar, fell 3.5 per cent on Monday, indicating a loss of about $400 million.

The $17.4 billion Templeton Global Total Return Fund Class A saw a decline of 2.5 per cent. That fund, which has just over 6 per cent exposure to Argentina’s fixed income market per Morningstar, lost approximately $440 million.

Mr Hasenstab’s $33.1 billion Templeton Global Bond Fund shed 1.8 per cent, leading to losses of roughly $592 million. Three of the other funds he co-manages with notable exposure to Argentine debt saw losses totalling just under $362 million.

The FT’s calculations are based on asset-under-management figures and portfolio weightings as of July 31st. Franklin Templeton declined to comment.

Chaos gripped Argentine markets on Monday after a stronger-than-expected electoral showing by Peronist candidate Alberto Fernández and his running mate, former president Cristina Fernández de Kirchner. It continued on Tuesday – although to a smaller magnitude – amassing even more losses for investors. – Copyright The Financial Times Limited 2019