Pension funds should shift their investments towards emerging markets and away from western economies, according to an investment firm.

"If I was a pension fund I would sell all my assets in North America and Western Europe and invest them in emerging markets," Ashmore head of research Jerome Booth said.

"Even Australia is an attractive country to invest in because of its location and ability to take advantage of the Asian boom," he said. 

He said emerging markets did not have the high leverage economies that exist in western economies and therefore are not high risk.

Investing in infrastructure also offered greater access to emerging economies.

"Investing in infrastructure is a way for countries to save in the global economy. Already, India and China are investing huge amounts of capital in infrastructure. This will create more local manufacturing industries," Booth said.

He said Brazil and Indonesia are also boosting their investment in infrastructure.

A greater investment in infrastructure will create more domestic industries and the "US consumer will no longer be the only driver of growth in the global economy," he said. 

He said emerging economies do not have the high level of sovereign risk that western economies are now facing.

"After the Asian crisis, these countries started to build their own reserves, which allowed them to have a buffer in a market crisis. These countries still carry risk, but unlike western economies, this risk is factored in," he said.

Booth said pension funds should also avoid a herd mentality in their approach to investing.

"Many pension funds in the United Kingdom continued to invest in Iceland despite a warning by the International Monetary Fund in 2006," he said.

"No one should have to put up with the excuse that these funds attracted a loss because everyone was doing it."