Despite 2017’s Stellar Returns, Investors Still Bullish On Emerging Markets: Columbia Threadneedle Survey

A positive investor outlook for emerging markets (EM) was recorded in a poll of poll of investment managers and financial advisors by the Columbia Threadneedle Investments. This was a sentiment that followed those economies were one of the best performing assets in 2017. The level of optimism for the EM was 45 per cent and this year it rose to 57 per cent of the respondents.

About 43 per cent of participants have intention to enhance their EM investments and their inclusion in their portfolio in 2018, found the results of a latest Emerging Markets Investor Sentiment Survey which is a bi-annual poll that is created to get an idea of the sentiment about equity allocations to emerging markets.

Noting a 21 percent increase from Q4 2016 and a 54 percent increase from Q4 2015v was the Columbia Threadneedle Investments EM Investor Sentiment Gauge which was at 760 out of 1000 for this latest poll.

“We are once again seeing investors demonstrate a strong level of interest and a positive emerging markets outlook for the year ahead,” said Marc Zeitoun, Head of Strategic Beta at Columbia Threadneedle Investments. “Understanding the main drivers of growth in these markets continues to be a critical element for investors hoping to realize the full potential of the emerging markets in 2018 and beyond.”

The survey found that the majority or 62 per cent of the participants said that the present allocation of their equity to EM is either the same or more then what it was about a year ago. the survey further found that about only seven per cent had lowered their allocation to EM compared to about 15 per cent of the respondents doing so at the end of 2016.

For investment managers and financial advisors, sentiment on the outlook for strategic beta fixed income ETFs were also gauged by the poll. Passive fixed income funds that track broad-based U.S. fixed income benchmarks were currently owned by 39 percent of investors according to the poll.

About half of respondents or 40 per cent of respondents would take into consideration the idea of allocation of fixed income strategic beta ETFs with benchmark-based fixed income investing appearing to be have reduced attractiveness for some advisors. There were a large number of respondents who were also closely aligned on the aspect of diversification within tax-exempt strategies. To this effect, comments that they are “very concerned” or “somewhat concerned” on this aspect were expressed by about 78 percent of respondents.

Zeitoun added, “Simply investing in a fixed income benchmark won’t provide the right mix of investments that clients and advisors need in the current market and interest rate regime. Advisors need to consider broader fixed income solutions for investors seeking diversification and total return, such as strategic beta ETFs.”

(Adapted from Businesswire.com)

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