A poll of investors finds they are more optimistic about emerging markets than they were in the previous quarter.

A poll of 83 asset managers shows they have become more upbeat about emerging markets, possibly suggesting that some of the recent angst about such markets has diminished.

The quarterly survey, carried out by Emerging Global Advisors, produces an EGA EM Investor Sentiment score. This score rose 28 per cent from 538 in the first quarter of 2016 to 687 in the second quarter of 2016. Scores range from zero (most negative) to 1,000 (most positive).

"Positive” was the most common answer (47 per cent) for respondents’ outlook for emerging market equities over the next 12 months, followed by “neutral” (43 per cent). This is a change from the first quarter of 2016 when “neutral” was the most common answer, the survey showed.

The last few years have not been kind to many emerging markets, once the darling of global investors. The US Federal Reserve's signalling of its end to quantitative easing, deceleration in Chinese GDP growth and falls to commodity prices had combined to hurt these markets. In 2015, for example, the MSCI Emerging Markets Index was down more than 14 per cent. So far this year, the index shows total returns (in dollars) of 11.36 per cent, against the MSCI World Index of developed countries' equities, at just over 4 per cent since January.  

The July survey of asset managers worldwide by Bank of America Merrill Lynch reached a similar conclusion - that mood towards emerging markets is improving - even though globally cash levels have risen and equity allocations have dropped. In the BoA Merrill Lynch survey, allocation to emerging market equities jumped to a 22-month high in July – reaching net 10 per cent overweight from net 6 per cent overweight last month. The Japanese equity market saw its largest underweight in three-and-a-half years, with the Japanese yen perceived as the most overvalued it has been since January 2013.

Among other findings in the EGA survey, 49 per cent of respondents expect to stay the course with their EM equity allocation over the next 12 months, while 46 per cent expect to increase their EM equity allocation, consistent with last quarter; 78 per cent of respondents say their current EM allocation is about the same or higher than 12 months ago, while only 22 per cent say it is lower (down from Q1 2016).

Among the managers polled, more than 72 per cent manage more than $100 million in assets. The survey ran from 1 to 7 June this year.