87: Janus Hendersons' Thomas Haugaard – Emerging Market Debt

[i3] Institutional Investment Podcast

In this episode, we speak with Thomas Haugaard, Portfolio Manager for Emerging Market Debt at Janus Henderson Investors. Haugaard, a former economist, talks passionately about why emerging markets form such an interesting investment universe, the influence of geopolitics on debt securities and the risks from climate change. Please enjoy the show! Overview of Podcast with Thomas Haugaard: 01:00 My investment journey started with an academic interest 03:00 I shared an apartment with one of the authors of the Goldman Sachs report ‘Dreaming with BRICs’ 04:30 Emerging markets is where as an economist you see many interesting things: new economic policy, diverse markets and a lot of growth potential 05:30 I actually don’t really appreciated the ‘EM’ term; all countries are developing 06:30 Where do the returns in emerging market debt come from? 09:30 What is the best environment for EMD hard currency? 13:30 Inflation is the wedge in between fundamentals and financial conditions; when inflation goes up the conditions for EM are not necessarily improving 18:00 Travelling in Venezuela seeing electric good being confiscated by the army because of the perception that prices were too high 19:30 We have been investing in Benin, Senegal and Ivory Coast for many years as policies are changing for the better 21:00 It is hard to mention an EM country where there isn’t a lot of very interesting things taking place 22:00 Dispersion between EM countries has gone up significantly. Remember that we’ve had three years of unprecedented shocks. 26:00 There is a systematic relationship between how a market is trading a country’s sovereign credit risk and its rating 32:00 High inequality means less space for policy change due to potential for social unrest 33:30 Climate change and extreme weather events are impacting a lot EM countries 36:00 Hard currency is the entry point for EM countries, because they might lack institutional credibility or even a central bank 39:30 In hard currency, there is a component of the risk premium that you can model and predict 41:30 Uzbekistan is a zero to hero story