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Asia selectors tilt toward Europe

What a difference a year makes.

One year ago, at the FSA Investment Forum in Hong Kong, fund selectors surveyed were split between increasing allocation to European equities and keeping it the same (42% each).

Last week, at the FSA investment forums in Hong Kong and Singapore, 72% of fund selectors surveyed across both events said their geographic preference for an equity allocation increase over the next 12 months is Europe.

The asset allocation preferences of Asian fund selectors are neatly in line with those registered among their European peers, who also have a strong bias towards European equities.

European equities were followed by absolute return funds, with a total of 69% of fund selectors across the two locations saying they plan to increase allocation to the asset class.

But the most dramatic shift in sentiment is with emerging market bonds, which is probably not much of a surprise and is again very much in line with the European line of thinking. Perhaps due to the uncertainties surrounding the overdue hike in US interest rates, an average of Hong Kong and Singapore fund selector survey respondents showed 60% plan to decrease exposure to the asset class.  

That’s a fast U-turn from last year. In 2014, 48% said they wanted to increase exposure to emerging market bonds, according to FSA’s data.

The survey also revealed that Hong Kong and Singapore fund selectors were generally close to agreement on most forward-looking allocation decisions, except for one asset class. In Hong Kong, 50% planned to decrease exposure to US equities in the next 12 months, and only 20% in Singapore.

Drew Wilson

Drew Wilson is editor of Fund Selector Asia. Previously he was editor at a publication covering private equity.

Part of the Mark Allen Group.