UK - Trustees remain wary of making allocations to emerging market debt despite recognising its diversification potential, an Aberdeen Asset Management survey shows.
Some 76% of schemes polled agreed EMD can provide diversification benefits but many said the investment was too opaque or too complicated to be able to conduct the necessary due diligence required.
Aberdeen's latest Pensions Intelligence white paper surveyed a total of 101 pension schemes with a total of £178bn ($284bn) of assets during January/February 2011.
However, the survey also found a third of scheme interviewed expected to increase their allocation to EMD in the next year and 46% expected to make an increased allocation in the next three years.
The fund manager said lack of knowledge about EMD was the most commonly cited barrier to investing.
Almost half the respondents said they had either no or very little knowledge about EMD.
White paper co-author Richard Dyson said: "As an asset class, EMD has been around for a number of years and has recently been enjoying increased interest. Although relatively few UK pension schemes have a current allocation to EMD, more are considering entering the market and many current investors are also considering topping up existing holdings over the next three years."
He added: "As EMD competes with other specialist asset classes for attention and governance budget, it is clear that there is a strong need for consultants and fund managers to do more to help pension scheme trustees understand the asset class."
Partner Insight: Members' evolving needs and expectations are driving changes in scheme administration. As the pensions landscape inevitably continues to change, how will your scheme's approach need to develop to keep pace?
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