During recent months, the outlook for the emerging market asset class has
continued to improve. Investor confidence has recovered, encouraging managers to increase commitments, especially towards Asia. Within the global emerging market equity fund universe, the average cash weighting actually rose during the quarter from July to September 2.8% to 4.3%.
South east Asia
The average weighting of global emerging funds investing in south east Asia increased again during the quarter from 35% to 41%. Global asset allocators believe that the Asian region will be the first to emerge from the crisis.
The shift in asset allocation has been marked since the beginning of the year.
The average exposure in Latin America declined during the quarter from 30% to 25%. For the year to date, allocation is down from 32%. The region is perceived to be behind Asia in terms of an improvement in the real economy, and questions remain about the ability of the Brazilian authorities to enforce their fiscal code of discipline. Among the biggest bears Pictet TF Emerging Markets Fund has the east exposure to the region, with a weighting of 2%.
The average weighting in emerging Europe declined during the quarter from 25% to 22%. The markets have recorded some healthy
gains over the review period, which have been
overshadowed by the scale of the rises
seen in Asia. Better economic numbers from Europe’s heartland continue to be a
prerequisite for further progress in Poland and Hungary.