Born and bred in emerging markets, Denise Prime arrived at GAM with an extensive background in Latin American fixed income. She discusses the impact that Covid-19 has had on emerging markets, as well as her personal reasons for specialising in EM.
Another day, another Covid-19 related disruption. As we enter the second half of the year, the outlook for the global economy remains highly uncertain. Denise Prime observes that the effect of the virus on emerging markets (EM) remains serious. “The number of cases is still rising sharply in many countries,” she says, “which reflects the complexity of imposing strict lockdowns and social distancing in places with high poverty and informal employment levels.” EM, which includes developing nations around the world, has borne the brunt of the ramifications of the developed markets’ (DM) economic closure. Global growth has collapsed, manufacturing supply chains have been disrupted, and long distance tourism has ground to a near halt. In many cases within EM, there are fewer tools and resources, compared to DM, to cushion the blow domestically. Nevertheless, EM has consistently posted lower fatality rates than DM nations, potentially due to the fact that EM populations tend to skew young.
EM markets have been assisted by China, one of the largest EMs, as it evolves into the de facto leader of the global recovery effort. With more countries lifting lockdowns, and optimism about rapid vaccine developments, EM local-currency debt has staged a strong rally since Q1’s record 15.2% fall. Denise attributes her cautiously optimistic outlook for the asset class to compelling valuations and a sharp improvement in EM countries’ balance of payments, both of which could signal good buying opportunities. However, she highlights that widely differing conditions in individual EM countries means that selectivity can be key to capturing opportunities in the space.
Her opinion on EM is not that of a casual bystander. Born in Brazil, Denise went on to live in Uruguay and Argentina, an upbringing that provided her with first-hand experience in hyperinflation, economic experiments and the transition of military dictatorships to democratic regimes. She honed her interest in economics at Bryn Mawr, a prestigious Philadelphian women’s college, and subsequently joined JP Morgan’s investment banking programme in New York City, a role that she describes as rewarding yet demanding.
“I joined as an analyst in their Latin America mergers & acquisitions group, where I worked on several notable transactions in the consumer products space, including the largest private transaction in Latin America at the time. I then moved to the Latin America debt capital markets group, helping sovereigns and corporates issue dollar-denominated bonds, often for the first time.” That would be her first exposure to the area that remains her focus to this day. She laughs, “I did need a bit more sleep than the brutal hours demanded, and I moved on after three years.”
JP Morgan provided a training ground that she would continue to use throughout her career. After spending a year travelling throughout Europe, Asia, North America and South America, Denise moved to London, working first at a Latin American news organisation and then as an Investment Writer at Henderson Global Investors. Fully embedded in the fund management team, Denise specialised in fixed income, and she successfully combined her financial skills and writing skills to educate herself on bond investing and portfolio management. After five years, Henderson’s new head of fixed income, David Jacob – who, coincidentally, many years later would join GAM’s board and is its current Chairman – encouraged her to apply for an opening on the emerging market desk. “The rest,” she says, “is history.”
Denise’s own history in EM continues to shape her life both in and out of work. Going on safari in remote Africa is a particular passion of hers, and shortly before lockdown, travelled to Tanzania to see “incredible” chimpanzees. Her interest extends beyond recreational visits; she stresses the importance of supporting wildlife conservation initiatives and local education programmes, which are facing severe financial strain in 2020 as tourism revenues decline amid continued Covid-19 fears.
She has also climbed both Mount Kilimanjaro and Mount Kenya, and last year completed a 10 day circuit of the Huayhuash mountain range in Peru, which she recalls as being “breathtakingly beautiful.”
Denise’s background reflects the increasing importance of diversity in the asset management industry. That said, she notes that “stereotypes exist for a reason,” in reference to the cliché of the white, male fund manager. Surveys routinely show that fewer than 10% of funds are managed by women. In a simultaneously humorous and bleak survey conducted by Morningstar in 2019, it was revealed that more UK funds were managed by men called David than by women of any name.
“This is a pity,” Denise says, in reference to the survey. “There is no doubt that a variety of perspectives enrich a risk-taking environment, ultimately benefiting clients.” She praises GAM’s strong awareness of the need to ensure that job opportunities attract a broad range of candidates, and she herself participates in the company’s mentoring programme. On a cautious note, she acknowledges that investors tend to favour long-term track records, which creates a culture of low turnover in fund management. But as this past year has shown, life has the ability to change much faster than we could have ever through possible.
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