The Institute of Sovereign Investors, the International Chamber of Commerce (ICC) and Africa Investor (Ai) recently launched a new Global Fiduciary Efficiency and Cost of Capital Framework at the Group of Twenty (G20), a forum for international economic cooperation, revealing substantial investment losses arising from legacy emerging market risk-measurement systems.
The analysis shows the 20-year divergence between emerging-market fundamentals and market-implied risk premia, driven by outdated risk-measurement practices rather than changes in fundamentals, has generated $4 trillion to $6 trillion in cumulative lost return opportunities for global pension funds, insurers and sovereign portfolios. This is equivalent to 30 basis points (bps) to 90 bps of annualized performance drag for universal owners.
It further estimates emerging and developing economies (EMDEs) face up to $15.6 billion in excess annual interest costs and foregone investment opportunities due to struct
