UK pension schemes are failing to realise the benefits of investing in emerging market debt because they lack knowledge about the asset class, although the majority agree these assets would be a valuable addition to their portfolio.
According to a survey commissioned by Aberdeen Asset Management, three quarters of the 101 respondents agreed that emerging market debt can be a valuable addition to portfolios, particularly as a diversifier.
Nearly half the pension schemes surveyed said they are not knowledgeable about emerging market debt, and nearly a third said this is the main barrier to investing in this asset class. Another third said the main barrier is that emerging market debt is too risky. However, almost half the respondents said they expect emerging market debt to take up a bigger proportion of their portfolios in three years' time.
"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," said Richard Dyson, co-author of Aberdeen's study.
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