Why Emerging Markets are Finally Outperforming Developed Markets | Robert Koenigsberger | Gramercy

Emerging markets are no longer the volatile satellite asset class of the past — they've evolved into a sophisticated, resilient, and increasingly strategic part of global portfolios. Robert Koenigsberger, CIO and founder of Gramercy, argues that the recent outperformance of EM equities and debt isn't just a reaction to U.S. policy or geopolitical shifts, but a fundamental re-pricing of relative value driven by stronger policy discipline, corporate resilience, and structural improvements in EM economies. He challenges the outdated 'yes/no' approach to EM allocation, advocating instead for a beta-agnostic, high-conviction barbell strategy that combines high-yield public and private debt with opportunistic, asymmetric plays — particularly in distressed China property credits and restructured sovereigns like Venezuela. Koenigsberger reveals that true alpha in EM comes not from indexing, but from deep underwriting, governance influence, and active restructuring — where credit groups can catalyze positive outcomes. He also exposes the fragility of developed market private credit, contrasting it with EM’s disciplined, institutional structure and superior risk-adjusted returns. For allocators overexposed to DM private credit, he offers a compelling alternative: embrace EM private credit’s explicit illiquidity for 10% higher yield, senior secured structures, and real control over outcomes.