View from City Road: GT emerges with new fund

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The Independent Online
DO you want to buy some Nigerian debt, going cheap? Or how about some Polish bonds - not paying interest but selling at a fraction of their face value? For the more sophisticated insurers and pension funds prepared to take the risks, these esoteric securities offer the potential for handsome returns. GT, the investment manager, is putting together a Dublin-based fund to cater for those who want to dip their toes into emerging market debt. GT points to the experience of Argentina where the control of inflation, privatisation and deregulation has contributed to a near-tripling in the value of its sovereign debt.

A repeat performance in other countries, where the International Monetary Fund and World Bank crack the whip, is the main lure, along with an income yield GT believes is likely to be more than 10 per cent.

GT hopes to raise dollars 30m-dollars 40m ( pounds 20m- pounds 27m) from UK and European institutions. It has set a minimum investment of dollars 400,000 and is charging an annual investment fee of 0.75 per cent.

It will split the money according to progress along the road towards economic prosperity. It proposes to invest 35 per cent of its fund's money in the bonds of countries undergoing stabilisation (Poland, Morocco) 40 per cent with countries that have moved on to reform (Philippines, Argentina) and 25 per cent with those that are close to full integration in the world economy (Mexico, Greece).

Setbacks are always possible, as the Brazilian example has demonstrated, but the advantages of the service are clear enough.

The only question is whether GT is the company to offer it. The firm has more than dollars 1bn in emerging markets but is a minor player on the bond side of it.