Mars Hill pulls back on emerging-markets bets

CIO Jason Huntley most concerned about rise in dollar, falloff in China

Oct 29, 2010 @ 1:07 pm

By Jessica Toonkel

Mars Hill Partners LLC has made changes to the portfolio of its Global Relative Value ETF Ticker:(GRV) to short its exposure to emerging markets.

The fund previously provided 25% net short exposure to the S&P 500, but this week, it put 15% of that toward shorting emerging markets, said Jason Huntley, chief investment officer at Mars Hill, which is the subadviser of the fund. The adviser of the fund is AdvisorShares Investments LLC. “With the Fed's announcement about QE2 next week and so much speculation about that, we think it's going to be bullish on the dollar,” Mr. Huntley said. “And any day the dollar has rallied, emerging markets has suffered the worst.”

While Mr. Huntley isn't worried about an emerging-markets bubble in the short-term, he said it is something that is of concern down the road. “I am especially worried about China,” he said. “That's where I see a potential for a bubble, because I am not sure the growth story can stand up.” Specifically, Mr. Huntley said he has concerns about whether the Chinese government will be able to continue to fuel the country's economic growth.

Similarly, in comments at The Charles Schwab Corp.'s Impact conference, which was held this week in Boston, Mellody Hobson, president of Ariel Investments LLC, said she's worried about the growth prospects of emerging markets — and China and India in particular. “When I first started working in the business 20 years ago, Japan was the headline. It was the next frontier,” she said. “China and India feel like that to me now, and this rosy discussion makes me nervous.”

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