EUROPE - The majority of Northern European Institutional investors have said they are planning to raise their exposure to emerging market equities over the next three years.
In a new study, which surveyed investors during the months of June until August, around three-quarters of participating institutions said they would commit more to emerging markets, according to Nomura Asset Management (NAM), who commissioned the research.
The study, which surveyd 17 pension funds, two asset managers and one fiduciary manager with in total €160bn in assets under management, found the institutions' current average allocation to emerging market equities is 4.3%.
One-quarter of these investors are planning to up emerging markets equity by between 4% and 10% of current equity allocations.
Mark Roxburgh, head of marketing and client services, claimed the survey showed investors' confidence in the continued "strategic case for emerging markets" investments, despite the credit crisis.
Additionally, the study found 40% of all respondents already employ regional or country-specific emerging market equity managers.
NAM, which focuses largely on Japanese and Asian investment markets, added: "We would expect some investors in this asset class to take a regional specialist manager approach in order to improve returns and lower risk."
That said, the monthly global fund manager's survey released by Merrill Lynch yesterday showed that European institutional investors confidence in emerging market corporate profits has fallen.
Almost 70% of respondents said they expect emerging market corporate profit growth to deteriorate strongly over the next 12 months, up from 25% in September.
The same amount of respondents added they think emerging market equities are still undervalued, up from 50% on previous months.
If you have any comments you would like to add to this or any other story, contact Carolyn Bandel on +44 (0)20 7261 4622 or email carolyn.bandel@ipe.com
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