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February 5, 2020 | Emerging Markets Debt
ESG in Emerging Markets Debt

Portfolio Manager

Yvette Babb is a hard and local currency portfolio manager on William Blair’s emerging markets debt (EMD) team. Before joining William Blair, she was a portfolio manager on NN Investment Partners’ EMD team, where she focused on frontier market analysis and portfolio management, working with both the hard currency and local currency teams. Before joining NNIP in 2018, Yvette was chief economist and strategist for sub-Saharan Africa for J.P. Morgan. She also held a similar role at Standard Bank in Johannesburg, South Africa. Yvette serves on the PRI’s Sovereign Advisory Committee (SDAC). She received a B.Sc. in international economics and business studies from Erasmus University of Rotterdam and an M.Sc. in economics from the University of Amsterdam.

Portfolio Manager

Luis Olguin, CFA, is an emerging markets corporate portfolio manager on William Blair’s emerging markets debt (EMD) team. He is also a member of the ESG leadership team for William Blair Investment Management. Before joining William Blair, he was a senior portfolio manager on NN Investment Partners’ EMD team. In that role, he had global portfolio management responsibilities for emerging markets corporate credit as well as analyst duties across the Latin American oil and gas, metals and mining, and industrials sectors. Previously, he was head of equities for AFP Habitat, a pension fund in Peru. During this time, he was also a professor at the University of Lima, where he taught several courses on investment management. Before that, he was a director with financial and managerial responsibilities for a family-owned conglomerate in Peru. He also spent eight years in fixed-income research and portfolio management roles at ING Investment Management (NN Investment Partners’ predecessor). Luis received a B.B.A. from Emory University’s Goizueta Business School.

RELATED STRATEGIES:


Emerging Markets Corporate Debt

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Emerging corporate credit markets are relatively unexplored from an ESG perspective, but sustainable opportunities can be found in unlikely places. Watch members of William Blair’s emerging markets debt team—Yvette Babb, portfolio manager (hard and local currency), and Luis Olguin, CFA, portfolio manager (corporate debt)—explain more. Watch the video or read the recap below.

Babb: ESG is very important in our view because we see it as an integral part of sovereign risk analysis. Doing country analysis requires one to understand all factors that influence the country’s ability and willingness to pay. Statistically, it is proven to have an influence on the return performance of individual credits. Understanding the individual context of countries becomes more important as countries are less developed.

Olguin: Not having a full understanding of ESG factors could lead to the wrong investment decisions. We believe that ESG is inherently a bottom-up process. Our ESG framework is analyst-driven. Really having this intimate relationship with issuers will help us gauge their momentum—you know, their improvement, their direction.

Using ESG as a framework to look at potential financial and reputational risks will help us understand the potential downside of companies, and thus create the potential for better risk-adjusted portfolios.
— Luis Olguin, CFA, Portfolio Manager

Babb: An integral part of our investment process is the sovereign risk model. The sovereign risk model is centered around two pillars. One pillar is the financial aspect of our model. The second aspect of the model is the ESG aspect. And so those two pillars inform our view of fair value for the spreads on sovereign credits. And we consistently evaluate the outcomes of that model. We have used this as an alpha-generating tool.

Olguin: We believe the way to create better portfolios is to manage downside risks. And using ESG as a framework to look at these potential financial and reputational risks will help us understand the potential downside of companies, and thus create the potential for better risk-adjusted portfolios. And at the end of the day, that’s core to our job. We seek to make the right decisions with the right information.

Investing in foreign denominated and/or domiciled securities may involve heightened risk due to currency fluctuations, and economic and political risks. These risks may be enhanced in emerging markets. Investing in the bond market is subject to certain risks including market, interest rate, issuer, credit, and inflation risk. High-yield, lower-rated, securities involve greater risk than higher-rated securities; portfolios that invest in them may be subject to greater levels of credit and liquidity risk than portfolios that do not. Diversification does not ensure against loss. Past performance is not indicative of future results.

Yvette Babb and Luis Olguin, CFA, are portfolio managers on William Blair’s Emerging Markets Debt Team

Portfolio Manager

Yvette Babb is a hard and local currency portfolio manager on William Blair’s emerging markets debt (EMD) team. Before joining William Blair, she was a portfolio manager on NN Investment Partners’ EMD team, where she focused on frontier market analysis and portfolio management, working with both the hard currency and local currency teams. Before joining NNIP in 2018, Yvette was chief economist and strategist for sub-Saharan Africa for J.P. Morgan. She also held a similar role at Standard Bank in Johannesburg, South Africa. Yvette serves on the PRI’s Sovereign Advisory Committee (SDAC). She received a B.Sc. in international economics and business studies from Erasmus University of Rotterdam and an M.Sc. in economics from the University of Amsterdam.

Portfolio Manager

Luis Olguin, CFA, is an emerging markets corporate portfolio manager on William Blair’s emerging markets debt (EMD) team. He is also a member of the ESG leadership team for William Blair Investment Management. Before joining William Blair, he was a senior portfolio manager on NN Investment Partners’ EMD team. In that role, he had global portfolio management responsibilities for emerging markets corporate credit as well as analyst duties across the Latin American oil and gas, metals and mining, and industrials sectors. Previously, he was head of equities for AFP Habitat, a pension fund in Peru. During this time, he was also a professor at the University of Lima, where he taught several courses on investment management. Before that, he was a director with financial and managerial responsibilities for a family-owned conglomerate in Peru. He also spent eight years in fixed-income research and portfolio management roles at ING Investment Management (NN Investment Partners’ predecessor). Luis received a B.B.A. from Emory University’s Goizueta Business School.

RELATED STRATEGIES:


Emerging Markets Corporate Debt

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