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Pension Funds Shift to Private Markets and Asian Emerging Markets
A new report reveals that global pension funds are shifting investments toward private markets and Asian emerging markets due to historically high levels in Western regulated markets and sustained buyback operations; private debt and Asian emerging market equities are seen as promising.
- What key factors are driving pension funds to seek new growth engines, and what are the most promising alternative asset classes?
- A new report by Create-Research and Amundi reveals that 157 global pension plans, managing €1.97 trillion in assets, are increasingly looking to private markets and Asian emerging markets for consistent returns. Currently, 74% are invested in private markets, and 62% in Asian emerging markets. This shift is driven by historically high levels in Western regulated markets and sustained buyback operations.
- Why are private markets, despite lower projected returns, still attractive to pension funds, and what specific sectors are attracting the most interest?
- Pension plans are seeking risk-adjusted returns amid low real yields and further interest rate cuts. The attractiveness of private markets persists, with 86% of respondents planning further investment in the next three years. This is fueled by a growing number of companies in private markets and longer private growth periods.
- How are geopolitical tensions and macroeconomic conditions influencing investment strategies in Asian emerging markets, and what thematic investment trends are emerging?
- The report highlights the growing interest in thematic investments, particularly within Asian emerging markets. India, South Korea, and Taiwan are expected to benefit. This focus reflects investors' view of thematic investments as 'good shock absorbers in the age of geopolitical risk,' emphasizing renewable energy and high-tech sectors.
Cognitive Concepts
Framing Bias
The report is framed positively towards private markets and Asian emerging markets, highlighting their potential for growth and returns. While acknowledging risks, the emphasis is on the opportunities, which could influence readers towards a more optimistic view than might be warranted by a completely neutral assessment.
Language Bias
The language used is generally neutral and objective. The report uses precise financial terminology without resorting to overly positive or negative language. However, phrases like "interesting opportunities" or "promising prospects" could be considered slightly subjective, although they do not significantly skew the analysis.
Bias by Omission
The report focuses on the perspectives of 157 global pension plans, potentially overlooking the viewpoints of other stakeholders such as individual investors or smaller pension funds. The analysis might benefit from including a broader range of perspectives to provide a more comprehensive picture of investment trends.
Sustainable Development Goals
The article highlights the increasing investment in private markets and Asian emerging markets, which can stimulate economic growth and create job opportunities. Investments in infrastructure, renewable energy, and technology sectors are expected to further boost economic activity and employment.