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Friday 19th of January 2018
March 28, 2012

Institutional investors set to increase emerging market allocations

by Gill Montia

Story link: Institutional investors set to increase emerging market allocations

Institutional investors set to increase emerging market allocations

A new survey from Aon Hewitt reveals that fund managers are anticipating an increase in demand for emerging market debt and equity among institutional investors during 2012.

The findings signal a renewed confidence in developing economies after a retreat following the Arab Spring.

Meanwhile UK and regional equities appear to have fallen firmly out of favour as Europe remains engulfed in crisis.

The annual survey of fund managers, with combined assets under management of £14 trillion, also explored institutional investor attitudes to investment strategy in the medium-term.

Respondents believe institutional clients will increase allocations to the following asset classes, over the next 18 months:

Expected institutional allocations (% of responses)
Emerging Market & Equity debt (16%)
Global Equity (8%)
Diversified Growth Funds (7%)
Alternatives (7%)
High Yield (6%)

In addition, the research indicates that fund managers believe institutional clients will:

Increase allocations to hedge funds, although at a slower rate than in 2011 and not via Fund of Hedge Funds.

Increase allocations towards Diversified Growth Funds to achieve improved risk adjusted returns.

Decrease allocations to sovereign debt.

Decrease allocations to UK and regional equities.

Aon Hewitt’s co-head of multi-asset research, Peter Halligan, comments: “Investor demand for equity-like returns with lower levels of volatility also looks set to drive demand for Diversified Growth Funds over the next year or so.”

He adds: “Investors are looking to fund managers to balance risk more effectively with a multi-asset approach to investing.”

 

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