Emerging Markets Debt: 3 Ways We Are Differentiated
Marcelo Assalin, CFA, partner, and head of our emerging markets debt (EMD) team, explains why, as fundamental emerging markets debt investors, we believe our distinct approach, our dynamic mindset, and our diverse team help to enable us to deliver better potential outcomes for our portfolios and clients.
Watch the video or read the transcript below.
- A beta-bucketing approach helps us seek to generate compelling risk-adjusted returns.
We believe that emerging markets debt is more than one single investable universe. We identify three universes: a group of high-risk countries, a group of medium-risk countries, and a group of low-risk countries.
The strength of our EMD capability is based on the strength of the people within our team.
We do that for three reasons: First, it provides for a more efficient allocation of our risk budget across the risk spectrum; second, it provides for better relative value assessment because we compare countries of similar risk; and third, it provides for a better risk-management process because we can more clearly identify the different sources of risk that the portfolios are exposed to.
- Dedicated investors like us seek to take advantage of disconnects between actual and perceived risk.
There is a disconnect between risks and perception of risks when it comes to investing in emerging markets debt.
The asset class has evolved tremendously over the years. Today, it’s more than one-quarter of the global fixed-income universe, and yet it remains underinvested and underrepresented in global fixed-income indices. And because of that, it’s less covered and less understood.
Not many investors actively look at the asset class, and that creates opportunities for dedicated investors like us who can understand the asset class to assess risks and to translate this into long-term value and returns to our clients.
There is a disconnect between risks and perception of risks when it comes to investing in emerging markets debt.
There is not one single investable universe. There are several universes, which requires a diverse mindset and a diverse set of skills.
The strength of our EMD capability is based on the strength of the people within our team, the diversity of the people within our team, the strength of our investment process, and the strength of William Blair, which is an organization that has cutting-edge technology and state-of-the-art infrastructure.
It’s fascinating that every day has something new happening in the emerging markets debt world—and it’s very dynamic and it’s never boring.
Marcelo Assalin, CFA, partner, is the head of William Blair’s emerging markets debt (EMD) team, on which he also serves as a portfolio manager.
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