Breaking News

Q&A: Volatility creates opportunity in emerging markets - PGIM head

Stock MarketsFeb 13, 2018 08:10AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
© Reuters. Q&A: Volatility creates opportunity in emerging markets - PGIM head

By Suzanne Barlyn

(Reuters) - The only thing abnormal that the head of Prudential Financial (NYSE:PRU) Inc's asset management unit sees in the recent burst of stock market volatility is that it had not happened sooner. PGIM Chief Executive Officer David Hunt, whose unit manages $1.2 trillion, spoke with Reuters about the opportunity it triggers and more.

Q: What do you make of the market correction?

A: It's not at all unexpected and a bit overdue.

Obviously, we look at that as long-term investors and for us, this means that we can get in at a better entry point.

Q: Is there an opportunity?

A: If you take the 10-year view, a large portion of the growth from worldwide economies will come from emerging markets. Over the last 18 months, it's been hard to get into that at a reasonable price. Now the numbers are looking more positive.

Q: Which emerging markets are appealing?

A: Looking at the world in terms of countries is not the way to do it. Industry trends now are more powerful. Trends around cities and urbanization are more powerful.

We think the internet has the opportunity to grow disproportionately in emerging markets than in developed markets. We've been big investors in China, India and others in the internet, payment platforms and other technologies that we think will leapfrog a lot of existing technologies in the developed world.

Q: What is PGIM's best-performing investment?

A: In 2017...good balanced portfolio did really well across the portfolio. Real estate investments were very strong.

We had a record performance in our private asset classes. Private credit performed extremely well. The most important thing was that more than 90 percent of our assets performed better than their benchmarks.

Q: Are there troublesome pockets of real estate?

A: We were well ahead of the trend of the difficulties in retail....That's now been a bit overdone, so we are now stepping back into malls where we think they have been sold off badly or where we think we can create a really interesting experience.

On the other side, the internet is creating really different uses for real estate....Every major U.S. city needs to have four or five big complexes not too far from the city set up and create the last line of delivery to the home...And my favorite one: self-storage. There is no more powerful human emotion than the desire to hold on to stuff. And it's not a big returner, but it's a good returner - about a 7-9 percent return.. and very low risk.

Q: Where do you see PGIM fitting in as passive managers take over more of the marketplace?

A: My general thesis on the passive piece is that it's both overblown and misunderstood.

If you look at the classes we manage, there is really no passive management of real estate. You can't own this building here and lease it in a passive way. There is no passive approach to commercial mortgages, to private debt. There is so far very little passive in the public fixed income markets.

The misunderstood part of it is that the rise of passive...has been a healthy competition for active management....You can't just hug a benchmark and charge to do that. You need to have high active shares, you need to be taking risks, and you need to be performing.

Q&A: Volatility creates opportunity in emerging markets - PGIM head

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email