- Mercer report uncovers asset allocation and investment trends on nearly
US$5 trillion1 in assets under management (AUM) from government, corporate, and mandatory pension schemes across Latin America, the Middle East, Africa, and Asia.
Employees Provident Fund(EPF) has increased its foreign equity allocation, and increased efforts to diversify portfolios, including higher exposure to alternatives.
- Both EPF and government pension fund (KWAP) combined asset allocation maintains a strong bias for domestic equities and Malaysian government fixed income securities.
- Globally, exposure to equities has been increasing since 2017 – equity allocations rose approximately 8%, from 32% to 40%, at the expense of fixed income.
- Market liberalization is enabling more diversified portfolios through increased exposure to foreign assets at the expense of domestic assets.
Mercer’s report noted significant variation in broad asset allocation among countries, driven by regulatory factors as well as market conditions, such as high levels of local interest rates supporting investment in domestic fixed income and cash.
Of the AUM analyzed, 56 per cent of assets were from corporate and government pension schemes in
Globally, average allocations were 46% to fixed income, 40% to equities, 4% to alternatives and 10% to cash/other. This positioning represents an increase in equity and a decline in fixed income over the measurement period, from 32% and 57%, respectively. Significant home biases remain, but Mercer expects the trend of market liberalization to continue as regulatory changes support broader global investment.
In addition to an increase in overall equity exposure, Mercer also noted an increase in foreign assets relative to domestic assets. As a portion of the overall equity portfolio, average foreign exposure increased from 45% to 49%, with even-more-pronounced movements in fixed income, where foreign exposure moved from 16% to 23%. This shift was notable in
She continued, “As investors diversify their portfolios globally, they need to assess how to access the best investment opportunities, and at the right cost.”
“Like other growth markets,
“With more than half of the world’s middle-class residing in
Notes to Editors
The survey reflects different reporting dates by source, though all “current” sources are from 2017-2018 across
Aggregated data was compiled on an asset-weighted basis; therefore, investors with large asset bases skew the data results more so than a smaller investor. Information contained herein has been obtained from a range of third-party sources. Although the information is believed to be reliable, Mercer has not sought to verify it independently.
Mercer delivers advice and technology-driven solutions that help organizations meet the health, wealth and career needs of a changing workforce. Mercer’s more than 23,000 employees are based in 44 countries and the firm operates in over 130 countries. Mercer is a wholly owned subsidiary of
1 Data as of the most recent date available for each country; please consult the full report for details.
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