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Franklin Templeton star manager loses $1.8 billion in a day

Franklin Templeton’s star manager Michael Hasenstab lost nearly $1.8 billion (€1.61 billion) in a single day during the exodus from Argentine assets following the pounding of president Mauricio Macri in last weekend’s primary elections.

The centre-left opposition made significant gains, overtaking centre-right Macri and causing the value of the Argentine peso to plummet. Odds of a debt default in the country over the next five years also grew to a 75% chance, it has been reported. 

Hasenstab has been one of the biggest buyers of Argentine debt. Six of his bond funds with the most significant exposure to the country suffered large drops in value during Monday’s outflow rush, the Financial Times reported.

The manager’s $11.3 billion Templeton Emerging Markets Bond Fund, which has more than 10% exposure to Argentine debt according to analysts Morningstar, fell 3.5% - a loss of around $400 million.

Another of his funds suffering losses was the $17.4 billion Templeton Global Return Fund Class A which saw a decline of 2.5% in value, according to the Financial Times.

Calculations made by the financial daily were based on assets under management figures and portfolio weightings as of July 31.

Thus far, Franklin Templeton has declined to comment but pointed out that other global funds were overperforming above the Morningstar average.

The California-based fund giant was not alone in getting hit by the market rout in Argentina following the primaries, though.

Fidelity and London-based Ashmore Group also saw funds take sizeable losses, while a Brazilian hedge fund suffered losses of between 25% and 59% according to Reuters.

Hasenstab himself rose to prominence following the financial crisis, making large investments in struggling countries such as Hungary, Ireland, and Nigeria, occasionally placing multibillion-dollar bets that their economies would turn around.

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