Pension plans allocations in emerging markets private equity are below those of private equity fund of funds, asset managers, endowments and foundations, according to an Emerging Markets Private Equity Association survey. Public and corporate pension funds have an average 4.4% of their private equity allocations invested in emerging markets, while endowments and foundations and family offices as a group had 13.2%. Private equity fund of funds and asset managers ranked second with 7.1%.
Of 81 limited partners with $310.5 billion in combined private equity assets polled between February and April, 52% expressed satisfaction with current returns from emerging markets private equity investments vs. 25% in 2006. Also, 63% said they expect private equity investments in emerging markets to deliver much better returns than developed markets in the next five years. Asia is the most attractive area for investment; 89% of respondents expect to put money in that region within the next five years; 87% cited Central and Eastern Europe/Russia.
Most respondents 84% cited portfolio diversification as the main reason for investing in emerging markets, followed by attractive risk-adjusted returns, cited by 69% of respondents.