Ignore emerging-markets debt at your own risk

Most investors are making a mistake by overlooking emerging-markets debt or associating the fixed-income category with emerging-markets equity, said David Hinman, chief investment officer SW Asset Management. “We think the emerging-markets-debt space is very inefficient, and by no means small,” Mr. Hinman said Thursday in Raleigh, N.C., where he spoke to advisers at a private conference hosted by Hatteras Funds. “If I was structuring an emerging-markets portfolio for clients, I would take money out of public equity and put it into private equity and public debt,” he said. “There's not much analyst coverage, and it's not as clean or streamlined, but European corporate debt is mostly investment-grade.” In terms of global exposure, Mr. Hinman said: “We're as heavy in Latin America as we've ever been, and we're as light as we've ever been in Eastern Europe because we don't like the proximity to Western Europe.” Specifically, he said: “We like Argentina, Colombia, Indonesia and Russia, but we don't like China, Brazil and most of Eastern Europe.”