UK - A poll, commissioned by Baring Asset Management (BAM), of UK pension schemes has reveals that, while an average of 60% of their total assets are in equities, only 7% are allocated to Asian equities (including Japan).
However, 60% of respondents identified Emerging Asia (China, Malaysia, Korea and Thailand) as the region in the world which has the biggest potential for equity gains (gross) over the next 10 years.
However one third of schemes polled said they would consider investing in Asian hedge funds (either fund of hedge funds or single strategy funds).
Indeed, out of Asia (exc Japan), Europe, Japan, Latin America, the UK and USA, the best performing MSCI region this decade is Asia (Total Return, 1st Jan 2000 – 31st Mar 2005, source: MSCI as at 31 March 2005).
Michael Hughes, Chief Investment Officer at BAM commented: “Comparing East with West, the East has more attractive currencies, growth, valuations and increasing dividends. In our view, Asia offers UK pension funds the best growth potential for the long term, but we believe that many schemes have too little invested in Asian equities.
“Growth in Asia will become more marked in the years ahead and investors will become more relaxed about the outlook for both the Emerged and the Emerging Asian economies. Indeed, the higher growth rates available in Asia are likely to contrast strongly against the slower growth in the West and its ageing populations.
BAM favours countries around the Pacific Rim including Japan that will benefit from China’s continued industrialisation.
The UK Pension Fund Poll, commissioned by Baring Asset Management, was conducted amongst 18 of the top 40 schemes, representing a combined £93 billion invested.
This week's edition of Professional Pensions is out now
Collective defined contribution (CDC) schemes will need clear and transparent governance frameworks, as well as effective communication strategies, to be a success, the Work and Pensions Committee (WPC) has been told.
The aviation sector's constant evaluation of mistakes to improve safety should be applied to defined benefit schemes, as too many are making the same mistakes again and again, latest research shows.
A month of strikes are due to hit 64 universities from tomorrow over major reforms to the Universities Superannuation Scheme (USS).