Ashmore Investment Management and Goldman Sachs have launched an emerging market debt structured product that uses a new kind of principal protection technology. Ashmore, a well-known emerging market debt manager based in London, is managing the underlying portfolio.Goldman and Ashmore jointly developed the product’s principal protection structure called variable proportion portfolio protection (VPPP), which is a new twist on constant proportion portfolio insurance (CPPI). According to Jerome Booth, head of research at Ashmore, VPPP is more flexible and better suited for an asset class like emerging markets – which can be highly volatile – and his firm’s active management style.
“From Ashmore’s point-of-view, this is a great way to raise assets from new investors,” says Booth.
So far, Goldman and Ashmore have sold $500 million of the new product mainly to Asian clients, insurance companies and institutional investors. Booth expects to sell more to investors who have avoided emerging market debt or have had a small allocation to the asset class in the past. These investors could be attracted by the principal protected format, which will guard them from market volatility.
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