Sovereign wealth funds can’t get enough of emerging market debt because their credit is seen as better than some developed markets, says Goldman Sachs Asset Management.

“The response from sovereign wealth funds is not should we invest [in emerging market debt], but how much?” says Owi Ruivivar, portfolio manager in Goldman Asset Management’s emerging market debt team based in Singapore.

Investors perceive there is a payments risk among developed markets, she says. Emerging markets have more secure balance sheets at a sovereign, corporate and household level, says Ruivivar.

A country whose purchasing power parity per capita a year is less than $US12,000 is considered an emerging market.

Ruivivar recommends on a five-year basis that up to 10 per cent of a sovereign wealth fund’s portfolio be invested in emerging market debt.

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