That wedge from treasuries or gilts has evaporated, but the margin over the risk-free rate is largely unchanged. I am therefore opti- mistic on not only a one-year view but with the long-term pros- pects of the asset class. Lasocki: I am cautious, but I am cautious about every risky asset class right now. However, as an institutional investor we cannot sit on negatively yielding cash and wait for the storm to pass. We have to find opportunities. We are not looking at emerging market debt differently than we were a few months ago. If it is a risky asset class there will still be opportunities. If we divest that would be purely on risk-return grounds and that opportunities could be more attractive else- where, but I would not be afraid of emerging market debt just because the pandemic might hit them harder than developed markets.


Ghosh: The asset purchases and quantitative easing by central banks in developed markets are going to force investors to carry on the hunt for yield. Emerging market debt provides some of the highest yields on offer, particularly versus the credit rating or risk involved. That could create a heavy technical tailwind for the asset class. Pickering: Most of my defined benefit schemes are looking for yield as they move towards lower dependency on the sponsor. Yield has an important role to play in the risk transfer to the insur- ance market. Trustees and their consultants should not turn a historic prejudice into a permanent principle. Our consultants have a duty to make sure we look even-handily at all forms of debt and in so doing determine whether emerging market debt has a role to play on a scheme specific basis as each of those schemes move to their des- tination, which in DB land is risk transfer to the insurance market.


November 2020 portfolio institutional roundtable: Emerging market debt 15


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24