A Standard & Poor’s (S&P) global equities regional sector review revealed a falling demand for funds with an exposure to developed markets as investor appetite for emerging markets grows.

S&P Fund Services stated that the review, which covered regional funds offering exposure to developed markets including Europe and Japan, consisted of fewer strategies compared to the four strategies rated in the last cycle and seven in the cycle before that.

S&P stated that the reduction in numbers was a result of the diminished demand from investors for specific exposure to these regions and recognition that there are better growth opportunities in other regions, including emerging markets. S&P also noted that investors achieved exposure to developed regions primarily through broader global equities strategies.

As part of the review, S&P upgraded the BT Japan Share Fund to four stars from three stars, while the BT Europe Share Fund retained its three-star rating.

“S&P’s conviction in the [BT] Japan Fund has increased due to continued stability in the team and consistent outperformance of the benchmark,” S&P fund analyst Simone Arblaster said.

“Our conviction in the [BT] Europe Fund remains the same following another year of changes to the team.”