JPMorgan Asset Management is expanding its London-based emerging market debt team with the addition of several new personnel.
The firm recently poached Fortis Investments manager Pierre-Yves Bareau, who will build up the emerging market debt team.
He will also attempt to expand JPMorgan’s emerging market debt business in corporate debt, whereas currently the business is predominantly sovereign debt. There will also be a bigger push into eastern European and African sovereign and corporate debt from the team.
John Hunt, chief executive officer of the firm’s institutional Americas business, explained that despite a general trend towards more basic assets there was still a considerable amount of interest in emerging markets on the part of the institutions.
He said: “I would say that as the credit market seized up and liquidity was reduced you saw a reduction of activity in emerging market debt. But I think that as people are looking to rerisk in their portfolio they are looking at emerging markets as a way to get attractive returns. They aren’t turning their backs on emerging markets, they see that as an opportunity set.
“We’re seeing more activity across our platform for international and emerging market strategies than we have seen in a while. I think it’s a function of institutional investors looking more broadly across the globe for sources of alpha.”
Mr Hunt admitted that investors were still skittish, but added that there were indications that many were starting to re-enter the market and take on more risk.
He said: “Equity RFPs [request for proposals] are really up, so I would take that as an indication that people are beginning to return to risk in their portfolio.”
However, on the alternative front, activity has remained stubbornly slow. Mr Hunt believes this is due to a renewed focus on more basic investments, liquidity and solvency. He is not convinced that the institutions have abandoned the idea of alternatives, but that right now there is too much focus on liquidity and solvency to make any serious commitment to alternatives, particularly those that lock investors into assets for years at a time. He would not be drawn on when investors might come back, but he believes it will require renewed confidence on their part, and perhaps some steady growth in US real estate markets.
JPMorgan’s institutional clients in the Americas are predominantly defined benefit (DB), with approximately 75 per cent of their clients coming from these types of schemes. While the remainder are in defined contribution (DC) schemes, JPMorgan officials pointed out that the DC side of its business was no less important and was catching up quickly to DB.
