IFAs favour Emerging Markets in poll

In a turn around from this time last year, Emerging Markets are now the preferred equity market for the majority of IFAs, however the typical UK investor portfolio is underweight in the region.  Research, conducted at the J.P. Morgan Asset Management Investment Summit 2009 amongst over 150 of the UK's top investment advisers, revealed that almost two thirds (61%) favour Emerging Markets compared to the US (23%), Japan (13%) and Europe (just 10%). This is a far cry from the 2008 summit at which just 25% favoured Emerging Markets. Instead, this time last year, 51% opted for the US as their favourite equity market.

In addition, 40% of IFAs said that Emerging Asia is the most favoured region within the Emerging Markets.  A fifth (20%) of those polled favoured Brazil the most and 7% opted for Eastern Europe.

However, despite IFAs' positivity towards emerging markets, average UK private investors typically only hold just 0.1% of their portfolio in the region. Jasper Berens, Head of UK sales at J.P. Morgan Asset Management said: "It's encouraging to see IFA sentiment swing back in favour of Emerging Markets as the case to invest in the region is a compelling one. However, despite this, UK investors are structurally underweight in the biggest investment story of the century. This should be addressed and I would like to see the weighting apportioned to emerging markets in a typical UK investor portfolio, better reflect the level of investor sentiment toward the region."

Emerging Markets hold 80% of the world population, 34% of the world GDP yet only 12% of world equity market cap. J. P. Morgan Asset Management predicts Emerging Market GDP to rise to 43% by 2020 and market cap to hit 26%.

Richard Titheringon, Chief Investment Officer for Emerging Markets at J.P. Morgan Asset Management explains: "One of the key things fuelling the growth of Emerging Markets is population change. Demographics is one of the growth factors that it is at the heart of the boom on consumption, infrastructure, financial services and commodities which are all driving factors in the Emerging Markets story. UK investors should be structurally overweight in emerging markets because they should outperform developed market equities, and rise in weightings in global equity indices over the next 5-10 years".