Harvard's Hausmann Asks JPMorgan to Cut Venezuela From Index
- Hausmann says investors shouldn’t have to invest in hunger
- Government faces choice of feeding its people or paying bonds
Harvard's Hausmann on Venezuela's Political Climate
Harvard University economist Ricardo Hausmann is calling on JPMorgan Chase & Co. to remove Venezuela from its bond indexes so that investors whose portfolios track the gauges aren’t compelled to buy notes issued by a government accused of human-rights violations.
While Venezuelan securities make up only about five percent of the benchmark JPMorgan EMBI Plus index, they account for about 20 percent of its yield because of the country’s high interest rates, Hausmann wrote in an editorial published Friday in Project Syndicate. That means many fund managers feel the need to hold the debt -- even if they think it’s distasteful -- because they’ll be evaluated by how their portfolios perform relative to the index. Venezuelan notes returned 53 percent in the past year, the world’s biggest gain.