Episode summary
$7B CIO: The Right Way to Invest in Emerging Markets
How I Invest With David Weisburd
· · 35 min · Hosts: David Weisburd · Guests: Robert Koenigsberger
Summary
Robert Koenigsberger argues that emerging markets are not inherently a trap; investors fail because they approach the asset class passively, late, and with too little conviction. He says the common mistake is treating EM as a yes-or-no allocation, then buying the wrong thing at the wrong time, often through index exposure that forces ownership of risky countries or securities just as conditions deteriorate.
He makes the case for a more deliberate process built around high-conviction underwriting, multiple entry and exit points, and a barbell that favors the best ideas rather than benchmark hugging. In his view, the most attractive opportunities today are often in structured private credit, where Gramercy can lend in dollars, secure collateral, and earn materially higher returns than liquid EM debt while avoiding unnecessary currency risk.
Koenigsberger also stresses that successful EM investing depends on local teams, platform partners, and an ability to underwrite people and credit culture before paper or jurisdiction. He says Gramercy evolved from a distressed hedge fund into a multi-strategy platform by aligning products with client needs, especially institutions that already have EM exposure and want a better way to manage it.
Key takeaways
- Koenigsberger says investors fail in emerging markets when they buy the wrong asset at the wrong time and then blame the asset class.
- He argues EM indices can be dangerous because they force passive exposure to countries like Argentina, Russia, and Ukraine at the wrong moments.
- He says structured private credit can pay around 16% to 17% in dollars in examples like Pemex suppliers, with collateral and shorter duration.
- Koenigsberger prefers lending in dollars or hedged back to dollars to avoid the extra volatility of emerging-market currency risk.
- He says the key underwriting question in EM is not just structure or jurisdiction, but whether the borrower has the willingness to pay.
Notable quotes
“I think most investors have thought of emerging markets more of an afterthought and more of a yes, no, digital, should I do it or should I not do it”
“Plan three levels on the way in and plan three levels on the way out”
“where we see a lot better return potential is in structured private credit in emerging markets two three year duration paper”
“we underwrite people first. You know, who are we lending to? What's their credit culture and how they behaved in times of address in the past”
How the episode opens
Robert, you're founder and CIO of a seven billion dollar fund focused on emerging markets. Everybody that I've ever met tells me emerging markets is a trap. Why is emerging markets not a trap?
Look, I think that's a great question and I think people perceive it to be a trap because of the way that they've approached the asset class. And what I mean by that is I think most investors have thought of emerging markets more of an afterthought and more of a yes, no, digital, should I do it or should I not do it as opposed to how I should do it. So what do they end up doing?
and they end up kind of buying the wrong thing at the wrong time. They stick with it for too long. They capitulate and they blame it on the asset class.
But that's not necessarily how they invest in developed markets. In developed markets, they think about where do I want to be? Where do I want to be?
Do I want to be in fixed income? Do I want to be in equity? Do I want to be in growth?
Do I want to be in value? But in EM, it just seems to be yes, no. Or they'll go and do one investment in one country, doesn't work out, and they say the entire asset class makes no sense to them.
I invest in Indonesia, emerging markets, doesn't work. And there's been times where, you know, someone will say, "Give an example of somewhere you're working right now." And say, "Oh, well, we're working in Turkey right now." They, "Oh, Turkey, um, would never invest there." I was like, "Well, let me guess. You did one private equity investment. The currency was at 1.5.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- emerging markets
- index investing pitfalls
- private credit
- currency risk
- underwriting and credit culture
Companies and tickers mentioned
- Gramercy
- Pemex
- AlphaSense
Watch the episode
Watch “$7B CIO: The Right Way to Invest in Emerging Markets” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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How I Invest With David Weisburd, this episode and its artwork belong to David Weisburd. Octagon is not affiliated with the show; this page is an independent summary.
