Pension allocation trends in Latin America,
the Middle East, Africa and Asia
Fiona Dunsire, Regional Wealth Leader
We believe that asset allocation is one of the most important decisions an investor makes. A thorough assessment of risks is critical to constructing a portfolio that will seek to meet your objectives whilst managing risks and opportunities that may arise. The COVID-19 pandemic has brought social issues into sharper focus, while introducing additional challenges as investors wrestled with health- and work-related issues as well as market volatility and the economic impact of the pandemic. COVID-19 also made an impact on investors’ governance structures.
Many countries have made significant strides along the journey toward recovery; however, regardless of the circumstances in your country, it is always a good time to review your allocations in light in light of shifting economic and market backdrops. This year’s Asset Allocation Insights 2021 will help investors review trends across institutional investors in various countries around the world.
Asset Allocation Insights 2021 highlights how pension fund investors within Latin America, the Middle East, Africa, and Asia are evolving across the global investment landscape while serving their beneficiaries and stakeholders locally. It summarizes some of the decisions investors in these regions— representing more than US$5.3 trillion in assets under management — are taking with their investment strategies.
Overall asset allocation was relatively unchanged over the past year, though increases into equities and decreases from fixed income are evident over the full ~7 year measurement horizon.
Allocations to foreign equities now represent 51% of aggregate equity allocations, the first survey in which exposure outside of investors’ home markets tipped over the midpoint.
Shifts toward alternatives paused over the past year overall, although there were increases in some areas, and we expect more interest in alternatives as investors seek to enhance diversification and potential risk-adjusted returns.
Investors are shifting focus to address broad market trends, such as sustainability/ESG, governance and fees, which have become even more important amid the challenges presented by COVID-19.
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