UK investors have tipped emerging markets as the top performer over the coming years, according to research by Ignis Asset Management.

A survey of 521 investors conducted by the firm found that, despite this prediction, a third of participants have no emerging market exposure at all, and 72 per cent have less than a ten per cent exposure to the sector.

In both the short and long-term, emerging markets are tipped to be the best performing equity market region, and 41 per cent of respondents believe these markets, including the BRIC (Brazil, Russia, India and China) countries, will outperform all others in the next three years.

The results back up a recent survey of independent financial advisers (IFAs) which showed that of the 180 surveyed, 83 per cent believe that greater exposure to the emerging markets sector will play a key role in closing pension deficits in the coming years.

"Retail investors are often assumed to be behind the curve when it comes to identifying sources of future outperformance, but it is clear that by strongly tipping emerging markets, they are entirely in step with most investment professionals," commented Jonathan Polin, director at Ignis Asset Management. "This makes it all the more puzzling that such a high number of investors have inadequate exposure to the sector, although the survey suggests this anomaly could be about to change."

However, 69 per cent of investors believe they are either correctly exposed or underexposed to UK equities, and the majority of advisers (89 per cent) believe UK investors are overexposed to the domestic market, showing very different views across the UK stock market.

"What is arguably more disturbing is that so many investors believe their exposure to UK equities is either fine or, in some cases, too low. When nine in ten advisers hold the opposite view, it is clear that there is a serious problem which needs to be addressed sooner rather than later."

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