Mohamed A. El-Erian is the new manager of Harvard's investments
. He came to Harvard from PIMCO, where he had a great performance record running their emerging market bond portfolio. I find the hiring of an emerging markets manager for a general investment fund to be quite telling. But the guy's pretty bright too.
Interviewed on CNBC a few weeks back, Mr. El-Erian observed on emerging markets in general:
"It's different this time around. When I said this 3 or 4 years ago, I think people thought I was a little bit crazy. And now people have bought in to the fact that this is secular process, this is a long term migration up the quality curve. There's lots of reasons why it's happening. It has to do with what the countries themselves are doing in terms of better policies, it has to do with the external environment, they are selling the right stuff at the right time."
He likes in Latin America: Brazil, Chile, Mexico.
He's worried about: Venezuela, Ecuador, Argentina.
"One of the themes that has been very successful in investing, is make sure you're investing in a set of risks that are complementary to China, that are clients of China, that are not competing with China. The reasons why is that China right now has embarked into a truly secular long term growth process, which means that it's demanding things it can't produce. So as long as you can feed into this production and consumption chain, you have a tremendous tail wind for your investment. So anything that complements China, as opposed to competes with China, is a good thing."
Interesting.. I'm thinking BHP and maybe EWA.