The desire to hold emerging market economies has faded as cracks have opened up in a number of these countries, one of the world's largest asset managers says.

The “BRICS” may once have been the darlings of investors but it appears the love affair is over, at least for the time being, according to a survey by Legg Mason, the US-listed asset management house.

The firm said that investors around the world are cutting their losses in emerging markets through this year, after a 12-month period of heavy losses in countries such as Brazil and Russia.

The firm’s 2015 Global Investment Survey showed that more investors than not plan to sell their emerging market exposure and move into developed markets. Some 29 per cent of global investors are shifting away from emerging markets, versus 21 per cent allocating to the sector.

A commonly observed problem is that investors - particularly but not always retail investors - can exit a market after a period of weak returns or losses, only to miss a subsequent rebound. Ironically, since the start of this year, the MSCI BRIC Index shows total returns (capital growth plus reinvested dividends) of 8.07 per cent in dollar terms, versus the MSCI World Index of developed countries’ shares of 3.73 per cent. Last year, the MSCI BRIC Index fell by almost 2.9 per cent.

With geopolitical concerns around regions such as Russia/Ukraine and the Middle East and North Africa hurting sentiment, the exodus looks set to remain. In India, however, the country continues to be enjoying a sort of “honeymoon” period following last year’s emphatic election of the BJP party in India, which has pledged to reform the country’s economy and boost infrastructure spending.

The Legg Mason study said that emerging market indices are at around 20 per cent below their 2011 peaks. “It appears the combination of headwinds from a strengthening US dollar and uncertainty over the sustainability of global growth are causing investors around the world to avoid the region once more in 2015,” the firm said of its survey.

In terms of individual markets, Russia – among the countries worst hit by the falling oil price – is considered to be the biggest no-go area for investors. In total, 49 per cent of global investors view Russia as the riskiest global market, more than double China’s total (23 per cent) and ahead of Brazil (27 per cent), despite the South American country’s economy being similarly exposed to energy, the firm continued.

While the tumbling oil price appears to be deterring investors from the Russian market, investors in the UK and US remain sceptical about emerging markets in general. Just 12 per cent of UK investors and 14 per cent of US investors plan to increase their exposure to emerging markets this year.

Field work for the survey was conducted between 19 November and 16 December 2014. In each market, samples included roughly equal numbers of respondents for the $200,000-$999,000 investor group and $1 million-plus group; the data was then weighted to be representative of the $200,000-$999,000 and $1 million-plus household total investable assets populations. A total of 4,208 persons were sampled for the results.