Why Emerging Markets are Finally Outperforming Developed Markets | Robert Koenigsberger | Gramercy
Other People's Money with Max WietheShow Notes
This episode is sponsored by Pictet Asset Management and its AI-enhanced equity ETFs. Pictet AI Enhanced US Equity ETF (PQUS):
Pictet AI Enhanced International Equity ETF (PQNT):
Emerging market outperformance is turning investors’ heads and in this episode of Other People’s Money, Robert Koenigsberger, CIO and founder of multi-billion dollar EM alternative asset manager Gramercy, explains why the macro environment has emerging markets looking more developed than some developed markets, particularly in how swiftly their central banks acted to combat inflation. He also explains how passive index investing can do damage to an emerging market portfolio and why the typical EM approach focusing on exposure is all wrong. Koenigsberger also dives into the structural advantages of emerging market private credit over its developed market counterparts, emphasizing the importance of local networks, senior secured collateral, and having a positive influence on corporate governance.
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Timestamps:
00:00 Intro
00:36 Pictet AI ETFs
01:54 How EM Investing Evolved
02:48 Why EMs Outperformed
04:08 Debt vs Equity Returns
06:09 Policy Convergence EM vs. DM
08:33 Diversifying Beyond Dollar
11:30 EM Private Credit
14:57 Pictet AI ETFs
16:32 Why Borrowers Choose Private
21:06 Defining EM Alpha
25:23 Index Construction Pitfalls
28:57 True Distress and Asymmetry
33:14 China Property Deep Value
35:15 Picking Winners at Five Cents
38:33 Sovereign Timing Checklist
40:07 Sanctions and “Uninvestibility”
43:37 Structuring Downside Control
44:58 Creditor Groups Collaboration
48:55 Restructuring Deal Template
50:23 Warrants Windfalls Risks
53:19 Governance in Private Credit
59:02 Underwriting People Networks
01:02:43 Hedging Without Shorting
01:05:49 Allocator Case for EM Credit
01:08:40 Liquidity Myths and Cycles
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This episode is brought to you by Sarmaya Partners. Learn more about Sarmaya’s LENS ETF, their full data and comparison, including performance here: https://sarmayaetf.com/
This episode is brought to you by Sarmaya Partners. Learn more about Sarmaya’s LENS ETF, their full data and comparison, including performance here: https://sarmayaetf.com/
James Elbaor, Founder and Portfolio Manager at Marlton LLC joins OPM to discuss why the private credit boom is officially over. Elbaor explains how artificial intelligence is threatening the SaaS businesses that make up over half a trillion dollars of private credit exposure, while also detailing how liquidity gates are currently trapping investors in massive interval funds like BCRED. The discussion concludes by exploring lucrative upcoming merger opportunities in the public BDC space and analyzing why asset managers utilizing permanent capital vehicles are being rewarded with premium market multiples.
Eric Wallerstein, Chief Macro Strategist at Clocktower Group, joins OPM to discuss why he sees substantial risk that the Fed is making a policy mistake by hiking into a supply shock that could cause a 2022 style bear market. He also explores the global coordination of rate hikes and why he believes the participation of lower growth economies like Canada indicate that this is a reaction to higher energy prices and not a substantially higher global neutral rate.
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