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European investors plan shift to ESG and emerging markets

/sites/default/files/images/stories/fe/News_images/Climate_change.jpgEuropean investors believe megatrends like environmental, social and governance (ESG) and emerging markets (EMs), will shape the way they invest in future, according to an RBC Asset Management survey.

The survey of more than 500 European fund consultants, buyers and wealth managers, revealed 93% believed megatrends would play a vital role in investment over the next three to five years, while 66% of European wholesale investors said they expected climate change and resource scarcity to be the most investable trend.

Anthony Pickering, head of business development for EMEA/APAC at BlueBay and RBC Asset Management, said: “Despite the monumental growth we’ve seen amongst passive investment funds over the past few years, a key takeaway from this research is the appetite amongst European wholesale investors for ESG considerations and emerging markets – something that we believe will be a significant driver for a ‘golden era’ of active management.”

“A trend that is reflected in our findings, with three quarters of European wholesale investors citing a preference for active over passive management funds,” he added.

Investors also said they expected capital flowing into sustainable investments to continue to scale, with 75% saying they would allocate more assets to funds with ESG criteria over the coming three to five years.

Overall, investors revealed they were planning to allocate to EMs more broadly, with 83% saying they believed EMs were set for a growth period over the next five years.

Of the investors who expect EMs to do well, 60% said they would look to capitalise on growth. Most considered Asia, excluding China, to be the most attractive option.

“Despite the relatively disappointing performance of EMs in recent years, there have been some clear success stories,” said Pickering.

“Active fund management will be vital in identifying the winners and avoiding the losers. Similarly, to ensure that investors’ ESG preferences are consistently being met, accessing fund managers able to take an active approach that can identify and invest in opportunities outside of benchmark weightings will be key,” he added.

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