Could these funds be hit by Wells Fargo’s woes?

SINGAPORE (Sept 21): As many as 52 funds available for sale in Singapore own shares in Wells Fargo, one of the largest banks in the US. Wells Fargo has slumped 6.7% since being hit by a US$100 million ($136 million) fine from the US’s Consumer Financial Protection Bureau (CFPB) on Sept 8. Shares of the bank have fallen 12.3% this year (in US dollar terms), lagging the MSCI World Financials Index, which is down 2.3%.

The fine came after the CFPB concluded that Wells Fargo employees secretly opened deposit and credit card accounts without customer authorisation. Bank employees then transferred funds from customers’ authorised accounts to temporarily fund the new, unauthorised accounts, often racking up fees or other charges. The illegal practise was widespread and driven by sales targets and compensation incentives.

The fund with the largest exposure (see table below) to Wells Fargo is Geoffry Dailey’s $33 million Parvest Equity World Finance C C fund, according to Morningstar Direct data. In the Sector Equity Financial Services investment category, the fund has a 5.1% allocation to Wells Fargo (at July 31). The stock is also the Parvest fund’s second largest holding behind JPMorgan Chase, which has a 5.8% weighting. Other US financials in the fund’s top holdings include Bank of America Corp and Citigroup.

---

Related Stories

• Morgan Stanley joins US peers in putting Mideast HQ in Riyadh
• Citi gets nod from Saudi Arabia for regional HQ in Riyadh
• Citigroup’s China head exits after less than a year in role

---