GLOBAL - An influx of sophisticated products has blown the choice wide open for pension funds investing in emerging markets.
Dutch giant PGGM this week announced it had bought into a collateralised loan obligation (CLO) transaction with ABN AMRO based on Brazilian debt.
Adam Rose, head of financial markets distribution Netherlands, ABN AMRO, told Global Pensions: "Brazil is in the top ten of the world's largest economies, but was mostly removed from the problems experienced last year.
"Structured credit was tainted by a blanket bad image which doesn't really apply here. We are proud of how this product has stood up to the recent malaise in the markets." Credit Suisse has launched a fund aimed at institutional investors wanting to capture the increasing consumerism in emerging markets.
Raj Tanna, portfolio manager, Credit Suisse Leading Brands Fund, said the fund was underweight US securities to avoid exposure to potentially very volatile conditions and possible recession.
He said: "We invest around 20% directly into emerging markets and a substantial percentage into companies which operate heavily in those countries, as a manufacturer or retailer."
Ian Beattie, fund manager, emerging markets, New Star, commented: "As with all previous crises and bubbles, money is building up and has to go somewhere. This could very well be emerging markets and Asia in particular.
"One way the world could get out of the sub-prime crisis would be if Asian countries started importing."
Socially responsible investing in emerging markets has been a concern for pension funds, but Tanna said by investing in major global brands with strong governance strategies there was usually no issue.
He said: "We focus on the consumption of goods in emerging markets, not their production."
Highlighting the growing importance of this area, S&P this week announced it had launched the first investable index of Indian companies which demonstrated high levels of commitment to meeting environmental, social and governance (ESG) standards.
Investors, driven by depressed interest rates, slower global economic growth and rich equity market valuations are examining non-traditional investment opportunities.
The registration deadline for the Workplace Savings & Benefits Awards 2019 is today.
This week's top stories were the DWP giving the green light to CDC and TPR granting extensions for 11 master trust authorisation applications.
Susan Martin says building strong foundations for business are the only way forward as the pensions industry is radically shaken up