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Apac investors tilt to themes

Three-quarters of investors surveyed in the region will likely increase their exposure to thematic investments.
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Almost 90% of institutional investors have started to adopt a thematic approach in their portfolios, while 43% of them allocate at least 20% of their equity portfolios according to a survey conducted by Vontobel Asset Management.

“The study suggests a strong interest in diversifying providers of thematic strategies. The growth in appetite for thematic strategies has also brought with it awareness among many investors of the need for greater levels of expertise from third party specialists,” said Benny Gay, head of intermediary clients Asia at Vontobel.

Three-quarters of survey respondents said they would increase their exposure to thematic investments over the next one to three years, while 57% of respondents prefer an active management approach.

The asset manager conducted a survey of 48 institutional investors and intermediaries across five countries in Asia Pacific in July and August this year.

Thematic investment aims to identify transformational trends, tomorrow’s market leaders as well as the companies best prepared to profit from structural changes. Some of the trends include digitalisation, e-commerce, the threats of global warming and rising pollution, resource scarcity and social imbalances among others, according to Vontobel.

Popular themes

Climate change and ESG, and new technologies are the two most popular themes among Apac investors currently and those with a one- to-three-year time horizon, the survey found.

New techonologies, especially AI, robotics and 5G, are gained popularity due to the rate of digital adoption across sectors and markets, and the digital transformation of the global economy.

Apart from climate change and ESG investing, exposures to urbanisation and smart cities in Apac portfolios are also expected to grow in the coming years as investors embrace the “new normal” brought about by the coronavirus pandemic.

For the social factor, demographic-related issues such as ageing populations and emerging middle-classes are rated as the most popular themes.

The total global AUM with sustainable investment mandates reached $2.3trn in the second quarter of this year, led by equities, according to Morningstar.

Europe recorded the most net inflows at $112.4bn, followed by the US at $17.6bn, and Asia at $1.2bn.

Part of the Mark Allen Group.