Global emerging markets roundtable
How are institutional investors accessing global emerging markets? Rob Treich: We have an emerging market equity fund. We also provide access through our all-country equity mandates, where we expect managers to invest part of their capital in emerging markets. In addition, our global investment grade bond fund holds emerging market debt in hard and local currencies. Dinesh Visavadia: It is a challenging time for trustees. There is a lot of uncertainty, but this is an asset class where there is growth and the opportunity to add value.
What opportunities are you seeing? Visavadia: Now that the world is changing, there is an opportunity to look at the asset class differently. Rather than combining it into a global emerging market fund, could we start doing our own country-wide allocations?
This is important because every economy is travelling in a different way. Sustaina- bility is a big part of that and it challenges the old-fashioned market cap way of doing things. Alan
Pickering: Our time horizons in defined contribution (DC) land are much longer than in defined benefit (DB) land. In driving more than 40% of global growth, emerging markets have a part to play within default funds and probably do not need much realigning on the basis of pound cost averaging. But I am not keen on having too many dedicated funds in the self-selection part of DC schemes. In DB land the time hori- zon is much shorter for most of my schemes, so one has to be careful not to tie up money in what could be a volatile or illiquid market.
The exciting part of the job is DC land. The more frightening bit is DB land where we are on ever-shortening time- frames with consultants telling us we are closer to the endgame than we think. So, what are you going to do with your emerging market portfolio which is in a trough?
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