A Gemcorp survey finds 42 per cent of institutional investors plan to raise emerging market private credit allocations — but North American funds lag behind
Nearly half of institutional investors plan to increase their private credit allocations to emerging markets over the next two years. This is according to a survey by Gemcorp, an emerging markets asset manager.
The finding comes as concerns over defaults in developed world private credit continue to mount. This is a trend directly relevant to Canadian pension funds with growing private credit books.
Low allocations despite rising intent
Gemcorp surveyed 250 investment decision-makers across 22 countries. Fewer than 6 per cent of respondents’ private credit portfolios were allocated to emerging markets on average. Four in ten had no emerging market private credit exposure at all.
The global private credit market is roughly USD3.5 trillion, according to the Alternative Investment Management Association. Only a small portion currently flows to developing economies.
Risk perception is the central barrier, even as institutional appetite for private credit continues to grow globally. More than 70 per cent of respondents expected higher risk in emerging market private credit relative to developed markets.
Felipe Berliner, Gemcorp’s co-founder and head of structuring, pushed back on that view.
“It is a view we have encountered regularly in conversations with investors for over a decade, but one we believe is misunderstood,” Berliner said. “What this study also reveals is that only a minority of investors believe they have a full understanding of the structural protections available in emerging market private credit.”
Developed world defaults are accelerating the shift
Concern about developed market private credit is growing. Over 90 per cent of those surveyed viewed rising defaults as a challenge. Just over half rated rising default rates in the developed world as a “significant” concern.
That pressure has already begun redirecting capital. Investors committed a record USD22.3 billion to emerging market private credit in 2025, according to the Global Private Capital Association.
For Canadian pension plans, the discipline of private credit portfolio construction is already under scrutiny. The Gemcorp data adds a new dimension: whether developed market private credit continues to justify its current weight in institutional portfolios.
North America lags well behind other regions
Regional differences in emerging market private credit adoption are pronounced.
More than 90 per cent of Middle Eastern investors already allocate to the asset class. Among North American respondents, that figure was 42 per cent—the same share planning to increase allocations globally.
Middle East-based investors also showed stronger appetite for specific destinations. Some 57 per cent rated Africa as an attractive target, well above the global average of 28 per cent.
The survey covered private and public pension funds, insurers, endowments and foundations, and family offices.
Canadian plan sponsors are behind the curve on EM private credit as global peers move ahead. As developed market private credit faces renewed pressure, the emerging market case may become harder to ignore.
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