General Electric's $120 billion asset management unit plans to increase holdings of emerging-market bonds to take advantage of the global economic recovery.
GE Asset Management has 90% of its $60 billion of debt securities invested in U.S. assets, said Paul Colonna, GEAM's chief investment officer for fixed income. That compares with a 50% weighting in equities, he said.
“The first step will be increasing our exposure to emerging market sovereign and corporate bonds and after that to other fixed-income areas,” Mr. Colonna said in an interview in London. “Emerging markets are well-positioned for global growth vs. developed countries.”
Emerging economies will grow 6.3% this year compared with a 2.4% expansion for advanced countries, according to International Monetary Fund estimates. Sovereign and corporate bonds issued in developing markets including Brazil returned 18.1% in the past year compared with 10.59% for U.S. debt, Barclays Capital indexes show.
About 30% of GEAM's assets come from GE's U. S. pension fund, Mr. Colonna said. The fund had $42.1 billion in assets as of Dec. 31, according to its annual report.
“The general goal is to follow the path GE has followed worldwide, taking advantage of the knowledge that the company already has,” said Mr. Colonna. The company will use external fund managers “where we don't have in-house expertise,” he said.