News & Commentary
NN Investment Partners (NN IP) today marks 25 years of investing in Emerging Markets Debt (EMD) by publishing 10 insights it has formulated over that time. NN IP draws these insights from the wealth of experience that it has gathered in navigating multiple cycles across the most dynamic and diverse universe of debt markets globally. These insights are incorporated into the investment processes of NN IP’s EMD strategies.
NN Investment Partners’ Multi-Asset team has managed The NN (L) Patrimonial Balanced Fund since 2008. For more than five years in a row, the fund has received 4 or 5 Morningstar Stars. The team’s stability, years of experience and continuous drive to learn and innovate are the most important factors contributing to this success. The team has evolved strongly during this period and can compete with the best in the industry.
A week ago we shared our outlook for EMD in general for 2018. In this publication our experts provide their expectations for different asset classes within the EMD universe.
On February 5, US equities had their biggest correction since August 2011. We see the decline in the equity market primarily as a technical correction and not caused by a change in the underlying fundamentals.
The general case for allocation towards Emerging Market Debt (EMD) in 2018 is a strong one, building on improving fundamentals. Portfolio flows into the EMD asset class in 2017 reached their highest level in the past decade at USD 112.8 billion; an upward trend which we believe is set to continue. The improved fundamental picture should allow risk premiums to compress further and the technical picture is expected to be supportive.
EU member states have pledged to reduce greenhouse gas emissions by between 80% and 95% by 2050. Large-scale initiatives that help to achieve this, such as offshore wind farms, can source funding via existing markets for project finance and infrastructure debt. However, an opportunity is also emerging for institutional investors to finance smaller scale “green” projects that have little or no access to such markets.
This year promises to be a very exciting one for alternative lending, with new players gaining prominence, potential for consolidation growing and new partnerships emerging. Gabriella Kindert, Head of Alternative Credit at NN Investment Partners, explores the trends that are likely to impact the alternative lending landscape in 2018 and how investors can benefit from them.
• Eric Verret joins NN Investment Partners (NN IP) to strengthen the Alternative Credit team as Head of Corporate Loans • Two new independent external members added to NN IP’s Alternative Credit Investment Committee • NN IP is deliberately strengthening its Alternative Credit expertise reflecting the growing importance of the asset class for clients
To enhance long-term investor value and instigate positive change in terms of sustainability, NN Investment Partners (NN IP) has been actively engaging on climate risk with companies in utilities sector since 2016. Now NN IP expands its engagement to the chemicals sector by joining the global Climate Action 100+ initiative.
• Global growth, supported across sectors and regions, is expected to stabilise at healthy levels in 2018 • Our research on drivers of market behaviour points at a still favourable environment for relatively risky assets • Equities are our preferred asset class, supported by a benign macro and earnings outlook as well as positive behavioural dynamics • We like Japan, emerging markets and Eurozone equities, while we prefer cyclical exposure based on strong macro data and moderately rising bond yields • Fixed Income assets are challenged by rising interest rates and tight valuations; a flexible allocation towards shorter duration and growth exposure is advised