London - Global investors managing more than $500 billion are buying emerging-market debt and shares of well capitalized companies to avoid the European debt crisis and low- yielding havens such as U.S. Treasuries.

"Balance sheet strength is a big theme for us at the moment," said Anne Richards, chief investment officer at Aberdeen Asset Management, which oversees 185 billion pounds ($288 billion). "Many European equities are high risk while we are also nervous about U.S. Treasuries, which look overvalued."

Surging borrowing costs for Italy and Spain, Europe's third and fourth-biggest economies, have pushed up prices of traditional haven assets such as 10-year Treasuries and German bunds, which are offering negative real yields. That's leading investors who met this week at the annual Fund Forum conference in Monaco to look to emerging markets for capital preservation as well as growth.

"People are underestimating the health of Asian issuers," said Richards, who is buying Indonesian sovereign debt, Latin American corporate bonds and gold to guard against major shocks in Europe. For growth, Aberdeen fund managers favor European stocks with strong balance sheets and customers in emerging markets such as HSBC Holdings Plc.

Jim McCaughan, chief executive officer of Principal Global Investors, which manages about $250 billion, agrees there's "not much point" in buying U.S. Treasuries at current yields. He prefers emerging-market debt and equities along with U.S. commercial property yielding 6 percent to 7 percent.

"The euro zone will be a source of volatility and a headwind probably for a few years to come," he said. There is a 25 percent chance Europe's leaders fail to deal with the crisis or get voted out of office and replaced by nationalist politicians who reject the euro, McCaughan said. That would cause Europe's economy to contract by between 5 percent and 8 percent in a year, he said.

Euro-area leaders this week struggled for consensus on reducing market pressure on Italy and Spain.