Trends across Asia, the Middle East, Africa and Latin America
Fiona Dunsire, Regional Wealth Leader, AMEA and Latam
We have identified three overarching themes that will affect investment decisions in 2022 and beyond:
Changing of the guardUnderstanding the effects of the changing fortunes of economic players and ways of thinking that have held sway for a long time, including the evolving objectives of monetary policies; the prospect of an “Asian century”; and the dramatic re-shaping of how finance is provided.
Position for transitionHow investors should plan for the changes required to put us on a more sustainable path; the role of impact investing; the management of resources to facilitate the green transition; and the power that can be exercised through engagement.
Modern diversificationHow portfolios should be reinvented to hit target returns while maintaining protection; the use of dynamic asset allocation between strategies and themes; and how to gain access to emergent innovators.
In July 2022, we launched a report that provides a comprehensive overview and actionable insights for investment allocation trends across Asia, the Middle East, and Africa (AMEA) and Latin America. We cover US$5.9 trillion in assets under management across fifteen jurisdictions, including a new entrant this year, the Dubai International Financial Center (DIFC). Mercer specialists in various regions and our partners – El Dorado Investments and Alexforbes – have also shared their insights across twenty markets. More information on the structures of many of these pension systems can be found in the Mercer CFA Institute Global Pension Index Report.
Allocation remain steadyOverall asset allocation has remained steady. However, in some jurisdictions we see increased allocations to equities, with more foreign diversification and alternatives.
Sustainable investing is demanding the attention of many investors and regulators, with a wide range of initiatives across different markets working towards greater integration of environmental, social and governance factors in investment programs.
Monetary policies are being reshaped as inflation balloons past central bank targets, and policymakers are grappling with the consequences of bloated balance sheets, the potential economic impact of higher interest rates, and disrupted global supply chains.
Each investor has unique circumstances, risk tolerances, liquidity needs and objectives. The actions suggested here are expected to benefit a broad range of investment portfolios; however, you should consider your own needs before taking action. Speak to your Mercer consultant or contact us to connect with a specialist.
Our analysis over many periods shows that a 60/40 equity/fixed income portfolio could have been better positioned to capture opportunities if alternative strategies had been integrated. For this reason, it is a good idea to explore alternative strategies such as private equity, private debt, real estate, and infrastructure to see how they might complement your existing portfolio.
We believe that many investors would benefit from having a larger allocation to China’s onshore market through a dedicated China equity allocation. Learn more about investing in China.
When inflation first started to climb following the pandemic, expectations were for a transitory effect. Yet it has proved stickier than many predicted. Now is a good time to assess your portfolio’s sensitivity to inflation and consider any appropriate changes. Read our latest thinking on inflation.
Establish sustainable investing beliefs, and begin to implement these in your investment program; for instance, by developing total portfolio climate-transition plans. Find out more about investing sustainably and actionable strategies for investors.
While many investors face investment restrictions and other factors leading to a large domestic allocation, there are a number of reasons to consider diversification beyond your domestic market. Our stuck at home paper provides more insights.
Compared to 50.6% the prior year
Compared to 36.1% the prior year
Compared to 4.3% the prior year
The same as the prior year
Compared to 4.9% the prior year
Note: Data may not sum to 100% due to rounding.
Mercer’s Asset Allocation Insights 2022 report provides a comprehensive overview of asset allocation trends across Asia, the Middle East, and Africa and Latin America.
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Fiona Dunsire Regional Wealth Leader, AMEA and LatAm |
About Fiona
Fiona is an energetic leader with a record of successful business and people management across pensions and investments. With over 30 years of experience with Mercer, she has led with both clients and the business, as UK Investments business leader and Mercer UK CEO.
In her current role, Fiona works with teams across the world in developing our strategy and business further. She has represented Mercer to regulators and government agencies and worked on multiple complex client and business projects. She is currently supporting the partnership with the World Economic Forum on Transformational Investment and a member of the World Economic Forum Future Council for Investing.
Fiona is an active advocate for diversity and mentor future leaders and women in business. She is interested in many things: art, film, dance; outdoor activities including cycling and golf; learning Spanish (badly); cooking and crafting. Connect with Fiona on Linkedin.
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Tracy Teel Regional Wealth Strategy Leader, AMEA and LatAm |
About Tracy
Tracy collaborates with Mercer colleagues around the world to better serve clients in Latin America, the Middle East, Africa, and Asia, and support strategic partnership and acquisition activity in these regions.
Prior to her current role, Tracy spent approximately 10 years providing a range of investment consulting services to institutional investor clients, primarily for corporate defined benefit and defined contribution plan sponsors.
She graduated from Wake Forest University (Go Deacs!), and is a CFA charterholder and a member of the CFA Institute and the Atlanta Society of Finance and Investment Professionals.
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Simon Coxeter Wealth Strategic Research Director, AMEA and LatAm |
About Simon
Simon is Mercer’s Director of Strategic Research for AMEA and Latin America, based in Singapore. He also evaluates investment strategies as a member of Mercer’s Equity Boutique and Diversifying Alternatives Boutique. Additionally, Simon has performed advisory engagements with a range of clients across a number of investment-related issues.
Before joining Mercer in 2010, Simon was Managing Director in a Swiss-headquartered private equity firm. Prior to that, he co-founded AsiaSource Capital, a boutique investment firm based in Singapore and New York, where he managed a fund-of-hedge-funds. Earlier in his career, Simon worked in Hong Kong as a sell-side equity analyst at Cazenove, having started his career as a global equity analyst at Prudential M&G in London.
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