Keith J. Gardner, Head of Emerging Markets at Western Asset Management (WAMCO), one of the world's leading fixed income managers, talks with Funds Society about their expectations for Mexico, the firm’s investment process and the possibility of increasing their dedicated Mexican product offering.
"Amongst emerging markets Mexico is one of our favorites,” says Gardner, mentioning Mexico's strong fundamentals, and the positive prospects that could come about if the reforms are approved. He also mentions that at WAMCO, they are excited about the fact that all three parties are aligned when it comes to the reform agenda, which he believes could propel México to the next level and separate them from countries like Brazil. They also believe that the reduction of the informal economy, a stronger competitive landscape in the telecom, and various key industries, as well as a stable currency and low interest rates could be beneficial for both the government and the private sector in the short run. Of particular interest is the energy reform, which if properly paired with the fiscal reform, could have an immediate impact on GDP.
Speaking about their process, the executive mentions that as Dollar based investors, the positions they take in Peso denominated assets- normally on the 10yr part of the curve- in the Mexican market allows them to get alpha by having off benchmark investments. "We consider local bonds the most attractive, because even at current levels, they still offer an interesting pick-up. We continue to be constructive on the peso" mentions Gardner.
When it comes to evaluating a potential investment at WAMCO, besides considering historical yields, the various teams -located in Pasadena, Hong Kong, London, Melbourne, New York, São Paulo, Singapore, Tokyo and Dubai- check and ponder the relative value compared to the region's and the world's.
Keith J. Gardner has over 30 years experience in analysis and portfolio management. He started his career as analyst in Salomon Brothers in 1983, and has been managing portfolios since 1985. He joined Western Asset Management in 1994 after a two year tenure at Legg Mason. He currently serves as Head of Emerging Markets at WAMCO.