27/06/2005

Pension funds under-invested in Asia, survey finds

A poll of UK pension schemes has revealed that while an average of 60% of their total assets are in equities, only 7% is 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, according to the research commissioned by Baring Asset Management (BAM).
One third of schemes polled said they would consider investing in Asian hedge funds - either funds of hedge funds or single strategy funds.
Commenting on the research Michael Hughes, chief investment officer at BAM, said: "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 poll was conducted among 18 pension schemes, representing a combined 93bn invested.