Pension funds see growth in the emerging markets
PENSION schemes are increasingly looking to invest in emerging markets although their overall allocations to equities has fallen as a result of the upheaval in markets across the globe, research has found.
According to Baring Asset Management’s poll of UK pension schemes, almost a third are now more likely to allocate to emerging markets as a result of market volatility.
The figure of 29 per cent of pension schemes looking to less traditional markets compared to 4.3 per cent in 2007 and zero per cent last year.
Barings found that of the pension funds that invest in emerging market equities, 90 per cent include Asia in their portfolio while 76 per cent invest in Eastern Europe and Latin America.
Just under half invest in a particular market whereas 43 per cent invest broadly as part of a global equity portfolio.
Overall, allocations to equities have plunged over the past four years from 70 per cent in 2006 to just 47 per cent.
Barings said there were signs that confidence is returning for equities with 14 per cent of respondents expecting to increase their allocation to equities in the next 12 months compared to just five per cent a year ago.