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Alternative Market Briefing

Emerging markets see highest expected returns

Wednesday, May 15, 2019

Laxman Pai, Opalesque Asia:

After five years of negative performance, Emerging Markets have some of the highest expected returns, said a report by eVestment.

In its in latest annual Capital Market Assumptions report, eVestment said that from the nine consultants analyzed, on average, Emerging Markets Equity intermediate-term return assumptions for 2019 were over 8%.

The Equity market has experienced directional shifts for several years. When looking at consultants' capital market assumptions for Equity, consultants lowered assumptions for US Equity strategies, said the report.

Many long-term equity assumptions remained unchanged while others decreased. In 2019, the lowest return assumption across both time periods and strategies was Cambridge's assumption for US Equity in 2019 at 3.4%.

Out of seven consultants' intermediate-term Private Equity assumptions, all but one increased their assumptions. For long-term assumptions, Private-Equity followed a similar trend with three consultants increasing their assumptions for 2019 and two decreasing.

The report covers nine different consultants - Aon, Callan, Cambridge Associates, Meketa, NEPC, RVK, Segal Marco, Verus and Wilshire - and looks at capital markets assumptions for traditional equity and fixed-income investments as well as real assets, private markets and hedge funds.

Key findings

The spread between intermediate-term capital market assumptions for US Large Cap Equity decreased from 225......................

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