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Fund Times

Greece's Potential Impact on Funds

With a potential Grexit looming, we take a look at Greece exposure across equity and fixed-income funds.

The four-years-running Greek debt tragedy is rapidly nearing its end. As negotiations to refinance Greece's bailout financing broke down, Greece was unable to meet its debt payment due at the end of June, and the European Central Bank would not increase the size of its emergency lending assistance program. Greece's prime minister called for a national referendum on Sunday, July 5, that asked voters whether the country should accept the European Union's conditions to extend further financing. Sixty-one percent voted "no." As high-stakes negotiations continue, Greece has imposed restrictions on ATM bank withdrawals and Greek banks remain closed to stem a bank run.

How Exposed Are Mutual Funds?
Whether or not Greece exits the eurozone, the impact on mutual funds will likely be contained. Few fund managers own Greek bonds or equities in their portfolios. Recently, just 7% of U.S.-sold open-end taxable-bond funds had exposure to Greece, mostly world-bond funds, and the average stake was a scant 0.3%.