Pictet scours India, EMs for assets safe from Trump’s policy agenda

Pictet’s $2.2 billion Emerging Local Currency Debt fund, managed by Liaw, beat 62% of peers in the last one year, according to data compiled by Bloomberg.

Pictet Asset Management SA is boosting its investment in India and other emerging markets that the European fund company deems would be less affected by Donald Trump’s policies.

The firm, with about 254 billion Swiss francs ($288 billion) of assets under management, is favoring Turkey, Argentina and India as it looks for markets with robust domestic economic development and where interest rate cuts are expected.

“We had been relatively cautious going into this event (US elections), putting a little bit of more protection and having a bit of cash,” Sabrina Jacobs, senior client portfolio manager at Pictet, said in an interview. “Now we are kind of finding a few spots where it is fairly uncorrelated.”

Jacobs’ comments echo other fund managers’ cautious approach as they assess whether President-elect Trump would follow through on his campaign pledges for higher tariffs, mass migrant deportation, and having a say in Federal Reserve policy. His platform may have significant economic consequences, including inflation and hurting growth, economists say.

Emerging markets such as China and Mexico that have a higher correlation with developments in the US have seen a bigger slump in their currencies this month, compared with markets like India and Turkey.

The money manager also favors the Philippines due to its low correlation with the US, said Carrie Liaw, senior investment manager for emerging debt at Pictet.

Pictet’s $2.2 billion Emerging Local Currency Debt fund, managed by Liaw, beat 62% of peers in the last one year, according to data compiled by Bloomberg.

India’s fast economic growth and inclusion in key global bond indexes have drawn foreign investors. Pictet is “constructive” on the Turkish lira as the country returns to orthodox policies and easing inflation is pointing at rate cuts. It also favors Argentina, which has also started easing its monetary policy while awaiting for more funds from the International Monetary Fund.

Opportunities in countries that are refinancing, such as El Salvador, are also attractive, Jacobs said. The prospect of lower oil prices is making some aviation companies’ dollar debt in countries like Mexico and Chile appealing, she said.

“We have seen what Trump said he wants to do but in the end it could be different to what he will actually do,” Jacobs said. “We can’t really say too much until early next year.”