I would not want the ups and downs of the next six to 12 months to frighten me off


looking at this asset class. Alan Pickering, Best Trustees


A question we are often asked is why doesn’t Jupiter cover Asia from its offices in Hong Kong and Singapore. To me, we have reached a point where there is so much local knowledge we can access that we do not need someone to be in the country. On top of that we travel. I have been to Latin America and my peers have been to Turkey, Indonesia and Africa. It is impor- tant when you invest to kick the tyres to see what is happening on the ground. During those trips you meet government offi- cials, journalists and companies, so after five days you come away with a good feeling of what is happening in the country. It is about relationships, travelling and having a good team.


Do you have confidence in the standards of ESG in the emerging world? Rhodes: There are questions about ESG in developed markets. It is difficult because there is no single standard of measure- ment. Factor investing could be useful here because certain stocks are left behind, limiting your risk.


As an industry more needs to be done to set a standard metric on this. Until that happens, I do not know how much faith many trustees will have in the wildly varying reports they receive.


The industry has to do more to give trustees confidence in what is measured, how it is measured and how transparent it is. Lasocki: ESG is critical. The conversation has evolved. It is no longer about simply asking managers if they have an ESG pol- icy. It is not a box-ticking exercise.


Arevalo: We have been looking at China’s real estate sector. To give you a sense of how much of a bloodbath there has been, of the 48 companies which had dollar bonds only eight are still standing. Real estate is about 20% of China’s GDP. There have been headlines that people are not willing to pay their mortgage until their property is completed. So unless the government does something, the economy will struggle to meet the 5.5% target. In the past 10 years China has not missed its growth tar- get by more than 50 basis points. Even if you give them some wiggle room, they will be far away from 5.5%.


If you are based in London how do you know what is happening in China, Brazil and South Africa? Arevalo: I am lucky to have an excellent team. We have special- ists focusing on Asia, EMEA and Latin America. What is also important is having strong relationships with research houses.


It is probably the one thing pension plan members would ask me about if they met me. They probably wouldn’t ask about particular names in the portfolio, they would ask what happens with their pensions money ESG-wise. It is great to work for a prestigious name such as Royal Mail but it comes with huge responsibility. You do not want newspa- per headlines telling people that the Royal Mail’s pensioners ended up funding certain activities. Going back to selectivity, there is a huge reliance in the indus- try on ratings and a simplistic approach. For example, Russian bank Sberbank was one of the top rated ESG companies ahead of JP Morgan and Deutsche before the invasion. I have always been baffled by how easily investors agree to lend money to a bloody regime or companies funding it, while at the same time rightly rejecting investing in, for example, polluters. You cannot always avoid the political context of ESG. Russia is one name, but there are other sovereigns which are questiona- ble from a social perspective.


Investors should be mindful of certain sovereigns if they are serious about ESG. Passive money is not good at that. With ESG you have to be selective, need an active approach, ideally someone who has ESG incorporated at every stage of the investment process, oth-


September 2022 portfolio institutional roundtable: Emerging market debt 15


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