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Optimism among investors in emerging markets is growing, survey shows

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Emerging Global Advisors’ (EGA) latest Emerging Markets (EM) Investor Sentiment Survey shows sentiment increased 28 per cent from 538 in the first quarter of 2016 to 687 in the second quarter of 2016.

Scores range from 0 (most negative) to 1,000 (most positive).
 
With emerging markets leading other equity regions in the first half of 20161, investors are showing growing interest in increasing portfolio allocations to EM.
 
"Positive" was the most common answer (47 per cent) for respondents' outlook for EM equities over the next 12 months, followed by "Neutral" (43 per cent). This is a change from 1Q2016 when "Neutral" was the most common answer.
 
Forty nine per cent expect to stay the course with their EM equity allocation in the next 12 months, while 46 per cent expect to increase their EM equity allocation, consistent with last quarter.
 
Seventy eight per cent of respondents say their current EM allocation is about the same or higher than 12 months ago, while only 22 per cent say it is lower (down from last 1Q2016).
 
According to respondents, generating alpha and accessing a specialised exposure are viewed as the most important attributes when selecting a smart beta ETF.
 
"The survey empirically reveals growing optimism among EM investors and a willingness to utilise strategic [smart] beta portfolios to capitalise on EM's key growth drivers," says Marc Zeitoun, chief product and marketing officer at Emerging Global Advisors. "These results validate what we had described in our Strategic Beta In Emerging Markets thought piece, published earlier this year. By implementing a rules-based process that reflects the systemisation of alpha drivers, strategic beta strategies can cost-efficiently add alpha."
 
The survey is a quarterly poll of asset managers and financial advisers focusing on their sentiment and equity allocations to emerging markets. 

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