Goldman Bond Guru: Growth Markets More Appealing Than Treasurys
Bond investors should look to “growth markets” rather than the bonds issued by the governments larger, developed countries, according to Jonathan Beinner, Goldman Sachs Asset Management co-head of fixed income.
Speaking on Squawk on the Street Wednesday, Beinner said that investors are underinvested in the debt of growth economies around the world.
“When you think about it just from a fiscal standpoint, the developed markets, the large markets, look kind of scary and the growth markets actually look pretty appealing from a risk perspective,” Beinner said.
“Growth markets” is Goldman’s favored term for a group of countries more typically thought of as “emerging markets.” The term encompasses the so-called BRIC countries—Brazil, Russia, India and China—as well as 11 others that Goldman refers to as the “Next 11” or “N-11” countries: Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, Philippines, Turkey, South Korea, and Vietnam.
“In 2011, most of the positive momentum behind the world economy is being driven by the majority of these 15 countries. To describe many of these countries as ‘Emerging Markets’ no longer seems appropriate,” Goldman said in a recent note to clients.
Beinner's comments echoed those made earlier today by Goldman Sachs Asset Management Chairman Jim O'Neill.
"I think part of my job is to help people realize the scale at which the world is changing, and one of the things is to not think of some of them, particularly China, as an emerging market," O'Neill saidin an interview with CNBC.
Goldman Sachs now manages about $30 billion of growth market debt across its portfolios, Beinner said.
Although investors in growth markets will likely see volatility in the short-term and face some currency risk, over the long term the growth market debt looks attractive.
“Generally when you think about it, the large economies are printing lots and lots of money and the growth markets aren’t. So where do you actually want to put your wealth when you think about it in a longer term context?” Beinner said.