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Editorial
EM DEBT: CRISIS? WHAT CRISIS?
We are lending more money to emerging market governments and corporates than ever before. And why not? The developing world is the engine room of the global econ- omy, generating more than half of its growth, while the United States and parts of Europe suffer from low growth and high inflation. Yet the IMF claims the level of developing countries in or near debt distress is rising. Our cover story this month looks at whether investors should be worried or not (p.16). Yet seasoned value investors see volatility as their friend. It creates value allowing them to attack the names on their watchlists at deep discounts. After years of relative calm, Covid, rising interest rates and inflation have brought volatility back, but where should bargain hunters look for undervalued assets? We take a look from page 20. On the subject of watchlists, it would be understandable if many defined contribution (DC) pension schemes are looking at private market assets. The investment case for illiquid assets is strong and so DC schemes and master trusts are looking to put some of the contributions they receive from their members into such assets. There has been reform to help such schemes invest in illiquid assets, but barri- ers remain. We take a look from page 46. Private market assets, of course, are not just for DC. Many defined benefit schemes are exposed, such as the Wiltshire Pension Fund which three years ago altered its strategy to start accommodating more private equity, private credit and infrastructure. Find out why from page 12.
On a more practical level, we don’t drink the water in our oceans. Nor do we consume it directly from rivers and lakes. Yet the plastics, raw sewage, agricultural waste and oil that pours into the world’s waterways each day are impacting our health. Indeed, the seas purify our air, removes carbon from our atmosphere and influences our weather patterns. This is why to build a sustainable world we need to protect not only our sources of freshwater, but also the undrinkable liquid that covers 70% of our planet. Read how from page 30. This month’s roundtable discussion focuses on the changing nature of stewardship. portfolio institutional sat down with asset owners, those they trust to manage their assets, their advisers and campaigners to debate what best practice looks like. Finally, the scientific director of the EDHEC-Risk Climate Impact Institute gives his expert view of what more institutional investors need to do to fight climate change. We hope you enjoy the issue.
Mark Dunne Editor
m.dunne@portfolio-institutional.co.uk
Issue 125 | July-August 2023 | portfolio institutional | 3
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