UK pension funds have increased their exposure to Asian equity markets by 6 per cent in the past year, according a poll released by UK-based Baring Asset Management.
The poll showed UK pension funds' allocation to Asian equity markets, including Japan, had risen from 7.1 per cent to 13.2 per cent.
Emerging Asia was seen as the region with the most potential for investment gains over the next 10 years, and China had the most investment prospects over the next 12 months, according to the poll.
It also showed pension funds were least confident about US prospects.
"The East has more attractive currencies, growth, valuations and increasing dividends," Baring chief investment officer Michael Hughes said.
"In our view Asia offers UK pension funds the best growth potential for the long term, and we still believe that many schemes have too little invested in Asian equities."
Hughes said demand from Asian countries for commodities was unlikely to die away but funds should place greater emphasis on exploiting the scope for excess returns through alpha strategies as the region was re-rated.
"What happens in Asia over the next five years will have a dramatic impact on world markets but it is the domestic Asian story that presents the most exciting opportunities for investors," he said.
The poll also showed UK pension funds increased their allocations to equities in general, with 70.8 per cent invested by schemes in equities this year compared to 59.8 per cent in 2005.
