GLOBAL - Pension funds are increasingly comfortable investing in overseas markets they see as subject to increasingly global standards of transparency, according to Standard Life Investments.
Weeks after it won a mandate to manage for property portfolio of the £3bn (€3.7bn) Lothian pension fund - a move made by the local authority scheme with a view to diversification into overseas markets - the fund manager claims pension funds are increasingly comfortable with cross-regional investment.
"They're looking to chase return, as well as diversification," Mark Meiklejon, SLI property investment analyst told IPE Real Estate, "and they're comfortable accessing new markets. They're looking outside their own markets."
Asked whether confidence in the transparency of some global markets, such as Latin American markets, was misplaced, Meiklejon said: "They'll become more transparent in the medium-term because investors will demand it. Ours is a risk-adjusted view, rather than risk-averse. The return must compensate for the increased risk."
He acknowledged UK investors especially were currently "biding their time", adding "there's a lack of short-term pressure" in the real estate market.
"It's a short-term hiatus - but there'll be no structural impact. Most [pension funds] are underweight against their targets," he said.