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UK pension funds return to emerging mkts

Source: Reuters - Mon 23rd Nov 2009

UK pension schemes are showing a renewed interest in emerging markets equity after shunning emerging economies in the thick of the financial crisis according to a report from Baring Asset Management.

An annual poll of 21 of the largest corporate and government pension funds published on Monday revealed that 29 percent are now "more likely" to allocate to emerging markets equity as a result of recent global market volatility.

This compares with zero percent a year ago and 4.3 percentin 2007.

Appetite for global equity investments, which also involves investing in mature economies, decreased in the last three years to 47 percent this year from 70 percent in 2006.

Just under half of UK pension funds which invest in emerging markets do so through stand-alone mandates, while 43 percent invest in them as part of a global equity portfolio.

Just over half, or 52 percent, expect to keep their allocations to equity in general unchanged. 

Barings manages about 12 billion pounds in emerging market equity. Its $1.49 billion Global Emerging Markets fund, the largest in the category, posted a 72.3 percent return in the year to Oct 31, out performing peers by about 10 percent,according to Lipper Global data.

In the six-month period to end-October the fund returned 41.5 percent, underperforming peers by 0.60 percent.

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