Funds with the highest exposure to Evergrande

Struggling Chinese property developer Evergrande Group is about to undertake what could be the largest debt restructuring in China, the effects of which are being felt across global markets. Morningstar's team of analysts has published a new report, "Evergrande's Bulls and Bears: Fund Managers React to a Looming Default", which seeks to identify the managers with the greatest exposure to bonds issued by Evergrande.

The key points are as follows:

The pessimists

Among emerging market fund managers whose strategies are rated by Morningstar, several have expressed doubts about Evergrande for some time.

Emerging markets teams at Pimco, Barings and T. Rowe Price have avoided or significantly underweight the company in their portfolios since at least the mid-2020s, when the Chinese government announced tighter leverage limits for highly leveraged companies.

Optimists

Other managers have viewed Evergrande more positively in recent months. The emerging markets teams at Bluebay, BlackRock, UBS and Ashmore have tied their fortunes to Evergrande debt, though the motivation and timing of each differs.

A bumpy road

Evergrande's woes are spilling over into the Chinese dollar bond market, and credit spreads have soared. Fund investors who had bet heavily on Chinese companies are likely to feel the negative impact in the short term.

These are the funds with highest exposure to Evergrande:

Source: Morningstar