Emerging markets is an asset class where size and scale matters. Being able to leverage relationships and scale can be a major source of competitive advantage.
Size matters because one of the most sustainable ways to generate returns is to harvest new issue premiums. Pramol Dhawan, Head of Emerging Markets Portfolio Management at PIMCO, explains that by virtue of being one of the largest, if not the largest player, in the market, they are able to consistently approach issuers and maintain very high allocations to new issues.
He says: "We have a great reputational advantage with these issuers, which recognise us as being long-term and flexible investors. They know they can come to us and trust we will provide solutions."
As an example, Dhawan highlights PIMCO's role in collaborating with a Caribbean country that was looking to create and establish foreign investment in its local bond markets.
He adds: "Our globally distributed team also has specialists in each of these countries - if there are problems, we are going to be among the first to understand and help our clients."
Read the full interview here.
