ROUNDTABLE DEBATE: How does emerging market debt as a portfolio diversifier compare against alternative assets

Jenna Gadhavi: What factors should investors consider before deciding which alternative assets to allocate to?

Alan Higgins: Emerging Market Debt (“EMD”) isn't really considered an alternative asset, but that aside first and foremost hard or local currency is a factor to consider, and therefore the degree of potential volatility and return. A macro valuation and if you like a technical valuation should be done, so what is the underlying macro background for Emerging Markets (“EM”) or the major EM issuers as opposed to EM economies necessarily. The valuation tends to be crucial and mean reverting. Also shorter term factors may help with timing, but crucially I don’t believe it make sense to compare EM currency and debt with property, for example. Property, infrastructure and private equity are different assets whereas EMD is really a subset of fixed income.

This article is produced by Clear Path Analysis, 2015.