A woman sits next to her filled domestic cooking gas cylinder after its distribution, amid the country's economic crisis, in Colombo, Sri Lanka, July 23, 2022. REUTERS/Adnan Abidi
Reuters - July 29, 2022

Foreign mutual funds which have exposure to Sri Lankan equities have posted steep losses in their net asset values this year, prompting their fund managers to look for ways to trim their holdings and switch to alternative markets.

According to Refinitiv Lipper, the top eight overseas funds that have exposure to Sri Lanka have dropped 14.8% this year on average. That's a lot better than the Sri Lanka's CSE All-Share index's (.CSE) decline of 38% so far in 2022.

YTD performance of funds exposed to Sri Lankan equities

The Tundra Sustainable Frontier Fund A SEK , which had about 3.14% exposure to Srilanka, has lost 10.52% this year, while Harvest Asia Frontier Equity J JPY Acc and Holberg Rurik A declined 9.6% and 14.5%, respectively.

"During 2022, it(Sri Lankan exposure) has negatively impacted our performance by ca 3% (USD)," said Mattias Martinsson, chief investment officer at the Swedish fund manager Tundra Fonder AB.